501(c)3 Status Model Railroad Club


D&J RailRoad

D&J RailRoad

Professor of HO
The modular club I've been a member of now since the mid 90s has been kicking around the idea of transitioning from a 501(c)7 organization to a 501(c)3 status so we could take donations and qualify for grants. We never really had enough interest it seems to actually follow through with it and then when we lost our permanent layout space, the idea kind of went away completely.
Now, we may have an opportunity to set up a semi-permanent layout in a city square box car and eventually a more permanent layout in a restored mansion that is now a historical landmark. The idea has come back up. All just talk though, no real action.
Last fall I joined another club that was part of a 501(c)3 structure and put the pieces together. We could petition that club to merge us to their organization and we would take on the 501(c)3 status.
With that in hand, I ran for the Vice President office of the first club in the last election and won it. Now I'm in a position on the board of directors to more easily put motions to the floor for consideration. The first step was to get the membership on board with this merger. It was near unanimous. I put the package together for the action required for the merger along with the actions required to shut down the previous version of the club, i.e. IRS and state corporation commission along with the merger petition to the new org and a few other associated tasks. Just talking with members about it, they are pumped with the idea. The new club is enthusiastic about it as well to expand the membership as well as other layouts to operate on and the expanded fellowship.
An interesting point about this though. Several years ago, when we had our permanent layout, the club BoD voted to appoint me to the new position of layout foreman for the purpose of one person to oversee the maintenance and improvements to the layout. Shortly after that appointment we were given notice by the CSX and VRE that we would have to vacate the building for renovation efforts to support a passenger waiting area. So, my job turned into overseeing the dismantling and storing of the layout.
Now, with my new position, my primary job is to dissolve the club to prepare it for its conversion.
Don't ask me to fix anything at your house.
 
Met with the interested membership this past week. Some late comer wants to halt the whole process until he can get up to speed with the meeting minutes from the past few months as well as have the board of directors put together a summary of actions taken so far along with an executive summary of what the club will look like after the merger.
Along with that, he wants something done to preserve the heritage of the club. He's one of the original members of the train club as it started back in 1991. He still wants to bask in the long-faded glory of his accomplishment of writing the by-laws. This is in light of the fact that he didn't know the club's corporate name hasn't been renewed with the state for almost 5 years and is about to go away forever. Real concern there.
After that, another member wants a statement from the group we would be joining of how we would be able to leave the group at a later date and take everything with us that we brought in. An Escape Clause. Then they want to be able to look over the groups booking despite them not being concerned about an audit on our own bookkeeping over the past 5 years.
These people who are bringing up these requirements are the same guys who don't show up at regular events or when they do show up, it's after everything is set up and running.
I kinda feel like it's a slap in the face to the group we would be joining.
 
D&J RailRoad said:
Met with the interested membership this past week. Some late comer wants to halt the whole process until he can get up to speed with the meeting minutes from the past few months as well as have the board of directors put together a summary of actions taken so far along with an executive summary of what the club will look like after the merger.
Along with that, he wants something done to preserve the heritage of the club. He's one of the original members of the train club as it started back in 1991. He still wants to bask in the long-faded glory of his accomplishment of writing the by-laws. This is in light of the fact that he didn't know the club's corporate name hasn't been renewed with the state for almost 5 years and is about to go away forever. Real concern there.
After that, another member wants a statement from the group we would be joining of how we would be able to leave the group at a later date and take everything with us that we brought in. An Escape Clause. Then they want to be able to look over the groups booking despite them not being concerned about an audit on our own bookkeeping over the past 5 years.
These people who are bringing up these requirements are the same guys who don't show up at regular events or when they do show up, it's after everything is set up and running.
I kinda feel like it's a slap in the face to the group we would be joining.
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Real politics at work. :( Might be time for the supporters to take off the kid gloves.
 
Whoa, sounds like it’s getting very political there!
That was the downfall of the club I was in, actually I’m the one who started the thing and watched it swirl around the drain ten years later. Yeah we had a couple fellows that never participated in planning or work but showed up strictly to stir up the 💩.
Ill have to look up the 501 stuff, don’t think we have that here, but we did incorporate the club.
That basically translates to the CRA, our version of the IRS, spending thousands of dollars to collect a couple hundred from us. Now that’s political! 😆
 
Seems like in every club there's always gotta' be a few sourpusses in the honeypot. :rolleyes:

For the easy way out, why not just resign from your current club and join the other club? You and everyone else that would want to. Why would you want to bring a few malcontents like that over to a new club, anyway? Instead of merging, just let the deadwood keep their current club and not properly manage it however they see fit. 😯
 
If the majority just left this club and started our own 501(c)3 we would leave behind quite a bit of equipment, a trailer and a bank account of significant proceeds to just the few.
I think that's the real aim of the malcontents is to seize the existing assets. The vote of the majority will move all that to our new identity as a 501(c)3 in accordance with the IRS. The stuff cannot be given to an individual. That would be illegal.
 
I applaud you, KEN! That is a lot of work for anyone - and from what I can see - very time consuming!

Whatever happened to Majority Rule in this country?
Seems as if the 'always five percent' screw up everything for everyone!
 
D&J RailRoad said:
If the majority just left this club and started our own 501(c)3 we would leave behind quite a bit of equipment, a trailer and a bank account of significant proceeds to just the few.
I think that's the real aim of the malcontents is to seize the existing assets. The vote of the majority will move all that to our new identity as a 501(c)3 in accordance with the IRS. The stuff cannot be given to an individual. That would be illegal.
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Okay. Now we know more of the story. Seize existing assets by the few? That sounds about par for the course.

Battling the do-nothing, vocal minority. The bane of every club out there. Good luck on your endeavors.
 
I need to be patient with these guys though. I found myself getting riled up as they rattled on about what they wanted.
It will come down to a vote of the membership of what they want to do. If the minority doesn't like it, they can go pound sand and I need to not get dragged into their arguments. It's not vice presidential.
 
The vote will be this evening.
I put together a "Vision of the Club" document which the membership asked for in the last meeting. This described all the actions in detail that we would be executing along with what the club would look like after the merger. We sent that out to the club last week so they could all be up to speed by tonight with instructions that any questions should be directed to the BoD before the meeting. There will be a limited time for discussion tonight on the Zoom meeting and then the agenda vote on five motions to complete the merger. No new motions will be permitted during this special called meeting.
 
D&J RailRoad said:
The vote will be this evening.
I put together a "Vision of the Club" document which the membership asked for in the last meeting. This described all the actions in detail that we would be executing along with what the club would look like after the merger. We sent that out to the club last week so they could all be up to speed by tonight with instructions that any questions should be directed to the BoD before the meeting. There will be a limited time for discussion tonight on the Zoom meeting and then the agenda vote on five motions to complete the merger. No new motions will be permitted during this special called meeting.
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This is Déjà rêvé for me. Went through a couple of club conversions, that were a mess. The one to 501(c)3 basically destroyed the club. One faction thought we would make a mint in donations if they were tax deductions for the donors. The other didn't want to deal with the legal ramifications. It devolved into old members vs new members and kept adding additional issues to the pile. When it was clear there was no meeting of the minds it became a game for as you say "grap for club assets". Fortunately the original documents established a "stock" system where those with most invested had the most say in what happened. The old timers decided to let the new folks basically "have" the club, but did donate almost all the cash to another club that was already 501(c)3. Even so the "new" guys started with $9,000 and the club room formed a new legal entity that was tax exempt. Within two years they lost the club room (another whole political story in and of itself), of course the layout, and a modular layout they had started. Last I heard they were $27K in debt, begging the old members and everyone else to bail them out. sigh.
 
The motions passed to petition the umbrella 501(c)3 group for merger.
One motion was withdrawn which was to decide who from our club would fill the trustee seat on the umbrella group.
Our BoD will meet next week to draw up the final version of the petition letter and send it.
 
D&J RailRoad said:
The motions passed to petition the umbrella 501(c)3 group for merger.
One motion was withdrawn which was to decide who from our club would fill the trustee seat on the umbrella group.
Our BoD will meet next week to draw up the final version of the petition letter and send it.
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Congrats on a success
 
I think you spoke of having been to Cottonwood AZ and having run on Verrel's layout a couple of times. IIRC I told you I had asked him in a phone call what his plans were for the layout after he passed, and he was quite startled by the question: "Well I don't know. I haven't really thought about it, but I guess I'll just leave it to the two guys who built it for me."

All well and good, but it seems to me planning for this eventuality should be on your radar-screen too. What happens to the layout, the club...and the building and lot around and beneath it. Can an organization (tax-wise) like the one you are considering be converted to a "for profit or non-profit museum" status down the road? Thereby not turning fifty-odd years of collective blood, sweat and tears into a pile of lumber?

I've thought about this myself, re: the layout, building (out-building actually) and lot I might leave behind. In my case the current big lot it would be a part of might be subdivided, thereby separating and spinning the layout portion and new, smaller lot free from the main body of the big lot (and foundational house) it's currently part of. Ideally too, perhaps, leaving my nephew in charge of the whole shebang, although I think I should also make a provision for something else in case he just doesn't want to deal with it, or if something happens to him such that he can't.

Perhaps bequeath the whole thing and the lot beneath it to the city if a privately held arrangement no longer works. In the hope they'll keep the flame alive, as it were.

Not trying to make your burden/task even harder than it already is, but all of you might want to consider this side of things too.
 
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Right now, that issue is wayyyyyyy down the road. The basic documents governing our organization will say, if the club is no longer functional and no members left including the BoD, the assets will be distributed by the umbrella organization.
 
Our merger petition has been approved. We will start making the transition over to the 501(c)3 status over the next couple months.
I sent out a flurry of invitations last night for club members to stand up several committees in support of our transition. Each group will have their initiating directives to work with and further develop how their groups will execute and communicate their purpose.
We're going to be pretty busy over the next couple of months.
 
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