Hiking club needing advice

[schmuttis]

For those of you that belong to a hiking club you might be able to give our club some advice.

Our PA hiking club is small (150 - 200 members) and is very loosely organized - no rules, no structure, one self appointed leader who oversees everything. We usually get 20 - 30 people out for our hikes and some of these hikes are shuttle hikes. About once a year we do some relatively easy, non-AT trail maintenance and provide some AT trail magic. We also have two social events.

Several of our members attended the ATC convention this summer and came back with information that we should really become incorporated for the legal safety of everyone in the group. We have looked into incorporation but were wondering if there might be other options that would also protect us as a group.

We'd really like to know what your group did to protect themselves and any advice you might be able to give to us.

Thanks so much for taking the time to read this. Looking forward to your input.

[Another Kevin]

You seem to be well on the way to becoming a 501(c)3 charity - which would have the advantage that you could accept tax-deductible contributions.

Start by founding an association. You've actually already done so, merely by choosing to associate with one another, but you want to make it formal, which is as simple as drafting a paper stating:

ARTICLES OF ASSOCIATION: (Name of your club)
(1) The Name of this Association,shall be: ...
(2) The Object of this Association is to educate the public about the natural resources and history of Pennsylvania, to promote public health by fostering outdoor recreation, and to erect and maintain public works - such as hiking trails and shelters - in furtherance of these ends.
(3) The initial Membership of this Association shall comprise the list of persons whose names are attached.
(4) The Officers of this Association shall be Jane Doe, President; Richard Roe, Secretary; and Sally Smith, Treasurer. (Every organization needs these three. Initially, the secretary has to do most of the work of getting the organization off the ground, so choose the officers accordingly. If the informal leader is a control freak wants the President title, that's cool, because initially the Secretary will have the real clout.)
(5) The Board of Directors of this Association shall be the aforementioned Officers, and (list anyone else you want on the board, but keep it small).
(6) Officers of the Association shall be appointed by a majority vote of the Board of Directors, to be conducted at a board meeting. The Secretary shall publish to the Members the date and place of a meeting to elect officers at least 30 days in advance.
(7) Amendments to these Articles shall be proposed by the Board of Directors and shall be deemed passed by a majority vote of the members at a regular meeting. The Secretary shall publish the proposed amendments and the date and place of the meeting at least 30 days in advance. A Member who cannot attend in person may submit a proxy ballot regarding proposed amendments via any other member.
(8) The Board of Directors shall call a plenary meeting at least annually. The Secretary shall publish the date and time of the plenary meeting to the members at least 30 days in advance. Amendments to these articles proposed at a plenary meeting shall be deemed passed if accepted by a simple majority of the members present and voting.
(9) All meetings shall be conducted according to Robert's Rules of Order, 11th Edition.
(10) The standing committees of this Association shall include a Rules Committee, consisting of Jane Doe, Richard Roe, and Sally Smith, whose purpose is to propose such amendments to these Articles as they may deem appropriate.

Vote this in by a simple majority. Congratulations, you've formed an association.

Now vote in the following resolution, with a simple majority:

WHEREAS, the Association has been advised that incorporation may offer legal protection to the members engaged in the Association's business,
Now be it RESOLVED, that the Secretary shall seek legal counsel for the purpose of determining what type of legal organization will best advance the purposes of this Association. After initial consultation with counsel, the Secretary shall present to the Board of Directors an initial proposal, including a budget for activities such as pursuing registration and certification of Articles of Incorporation, applying for tax-exempt status as a charity under Section 501(c)3 of the Internal Revenue Code, and taking appropriate action under corresponding provisions of State law.

Vote it in with a simple majority. (And you trust that once they like the proposal, the Board will call a meeting for the members to vote on it.)

Now you have a person - whoever it was that you elected to be secretary - authorized to act for your organization. That person can interview lawyers for doing the paperwork. Virtually any lawyer will give you the initial consultation for free. And for a 501(c)3 application, you may well be able to find someone who will prepare the paperwork pro bono. In most states, lawyers are expected to do a certain amount of charity work, and this sort of thing is an easy way to get that out of the way.

And you let the lawyer take it from there, because now you're beyond my expertise. I get a lawyer for such things. But this is the boilerplate that authorizes the secretary to interview a lawyer for the club- rather than for the secretary personally, and gives a rule for the board to float the lawyer's proposal to the membership.

(Expect, informally, that once there's a proposal on the table, that the board will have to investigate insurance, and to propose membership dues to cover it - and to begin building a war chest for other activities.)

[schmuttis]

Thank, Kevin, so much for the detailed reply.

[moldy]

You are not a club. You are more of a gathering of like minded friends who occasionally meet socially on the trail. Protect yourself from what? Your group has no clubhouse, van, money, assets. They want to get you under their thumb so to speak. Sounds like you like it the way it is with no rules, no structure etc. You would end collecting dues. I would not go down this rabbit hole.

[Another Kevin]

moldy - On the other hand, collecting dues to share the cost of an insurance policy for club activities sounds like exactly what they're after with the "legal protection for the members." Done right, that sort of scheme can put their hike leaders "under the corporate veil" and limit their personal liability.

And if after consultation, they decide that they don't want to incorporate, they can always vote to dissolve the association.

[schmuttis]

Actually our club has been around since the 1920s and although quite low we do collect dues.

[WingedMonkey]

Sometimes the first step to becoming a 501(c)3 is to latch onto an existing non-profit. Then split off after you get your ducks all in a row and file your own papers.

It gives you some paperwork to show what you are or what you have done.

As an example the group "Warrior Hike" that are raising funds, are doing so under the tax exemption number of another group for now "Operation Military Embrace".

On the other hand, I'm like Moldy, and wonder why you need to form a non-profit if you aren't raising donations or own assets.

What organization is in control of the trails that your "group" does maintenance on?

[Tuckahoe]

Tax exempt status is getting abit ahead of the issue.

With the idea of protecting the membership and limiting liability, lowering tax rates and etc, the issue is the organization should formally incorporate. I am assuming that you are a Pennsylvania based group, so you may want to head over the the Pennsylvania Bureau of Corporations and Charitable Organizations -- http://www.portal.state.pa.us/portal/server.pt/community/corporations/12457

I would also certainly suggest seeking the advice of a lawyer. Is there a lawyer in the membership that can offer advice and guidance?

[Namtrag]

501 c 3 is a charity, which I believe has more stringent requirements. I believe you would fall under a different section as a so-called social club, 501(c)(7). Charities must even apply to the IRS in a grueling process in order to receive status as a charity, and in order for donors to be able to deduct their contributions. An advantage in Pa of being under the social club status is that you may not have as stringent requirements to register with the state.

http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Social-Clubs

[Southerner]

You're really asking for legal advice, so you should consult a Pennsylvania licensed attorney. Laws for establishing a non-stock corporation (i.e. non-profit corporation) vary from state to state. And, even if there is a Pennsylvania attorney among the WB members, no attorney is going to risk an ethical violation by offering anything that could be construed as legal advice on this sort of forum.

[Shutterbug]

...We'd really like to know what your group did to protect themselves and any advice you might be able to give to us.



There are a number of lawyers who post here, including me; however, I understood your request to be for others to share their experience, not for legal advice. I don't have any experience organizing a hiking club.

If it were me, I probably wouldn't bother with incorporation. Incorporation would add a increased layer of overhead and structure -- meetings to attend, minutes to keep, tax returns to file, etc. It provides limited protection from liabilities.

Personally, I rely on insurance. I carry high limits on my home owner's insurance, then I buy a multi-million dollar "umbrella" policy.

Let me use an illustration to show the difference. Suppose a member of the hiking club slips on a muddy trail, breaks a hip and files a law suit against the club and against you for sponsoring a hike that was unreasonably dangerous. The injured hiker contends that you were negligent for planning the hike. If you were actually involved in the planning of the hike, incorporation would provide you no protection at all, because the claim of negligence was against you personally. If you were a member of the club, but were not personally involved in planning the hike, incorporation would provide you a defense at the trial, but you would still have to pay your own legal fees. If you have liability insurance, you just turn the claim over to your insurance company, which pays for your defense and for any legal fees.

My personal advice (not giving legal advice) is to buy a good insurance policy and enjoy your hikes.

[Tuckahoe]

I do not have experience with formal hiking clubs, rather my experience involved reenacting/living history clubs. I participated in the incorporating of one club over 23 years ago. Incorporating was pretty easy and the Virginia Corporation Commission provided all the guidance necessary. It was a pretty painless process. Honestly though, the only reason thst most reenacting groups incorporated was to try and gain 501 c 3 status, to legally protect their club name, or because it was thought that it made the organization more legitimate. After all we carried "Inc." behind the name.

The next organization I belonged to we never bothered to incorporate. We did have a rather formal structure and we were able to ally with other clubs to carry insurance.

The club I belong to now is rather informal, much like the hiking club in the OP. Most all of the members in the past have been involved in the silliness that becomes club politics and just dont want to bother with it. We are protected by the insurance of a larger organization that we belong to, and those events are not open to the public. When we do public programs we do them as official volunteers or short term employees of the museum or agency that organized the event. In our case we found that with 55 members spread across the eastern US it was easier to be an informal association and forego meetings, treasuries, and etc.

[schmuttis]

This is all fantastic advice. I can't thank you all for your input. This gives us even more to consider.

[Tuckahoe]

501 c 3 is a charity, which I believe has more stringent requirements. I believe you would fall under a different section as a so-called social club, 501(c)(7). Charities must even apply to the IRS in a grueling process in order to receive status as a charity, and in order for donors to be able to deduct their contributions. An advantage in Pa of being under the social club status is that you may not have as stringent requirements to register with the state.

http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Social-Clubs

A hiking club can potentially be either a charity (c 3 ) or a social club (c 7). It depends on its stated purpose. Most reenacting clubs that are incorporated and tax exempt gain that status as 501 c 3 charities based on their structure as educational organizations.

A hiking club could be "an educational charity fostering an understanding in its members and the public and understand of the outdoors and the yada yada yada..."

[Namtrag]

Thanks, Tuckahoe. Sounds like the OP has some digging to do.

[max patch]

Shutterbug makes a excellent point. A million dollar liability umbrella for a couple hundred bucks (a bit more if you have teens that drive) is really something everyone should have.