Rotary Clubs are doing immense good in their communities and around the world. In the U.S., though, most Rotary Clubs are classified not as 501(c)(3) charities, but as 501(c)(4) social welfare organizations.
To receive tax-deductible charitable contributions, therefore, Rotary Clubs generally coordinate with local Rotary Foundations. At Headquarters, Rotary International teams up with the Rotary Foundation (TRF) in its worldwide projects.
Like so many other small volunteer-run nonprofits, Rotary Clubs and Club-level Foundations face compliance challenges to stay in good standing, including:
- Federal and California income tax exemptions and related annual filings;
- California Attorney General registration of organizations holding charitable funds;
- Federal and California reporting of contractor compensation and major raffle prizes; and
- Secretary of State biennial filings by corporations.
The proposed regulations of the California Attorney General will raise the penalties on nonprofits with charitable funds, if they fall short of any of these filing requirements. So this is the year to get squared away!
Because there are roughly 100 Clubs and Foundations in my District 5340 (San Diego & Imperial Counties), a team effort of Club officers, District executives, and Rotarian tax and legal professionals is called for. A fine example is the presentation at our District Assembly by Dan Malloy, CPA of Dickerson Rix.
To carry on the march, this page will provide updates and supplemental resources. Comments are invited.