Alumnae Association Banking

[SigDelt91]

My best friend and I have been trying to start an alumnae association for our sorority for almost 2 years now. We got in touch with someone from our national office about a year and a half ago to ask for some guidance, and we were told that for our sorority, alumnae groups are entirely autonomous. When we asked about paying for events or supplies for events, we were told to use PayPal and Venmo. We haven't had any funds until recently, so that wasn't an issue until now. In the last few months, we've had alumnae give us donations or express interest in making donations. However, some of these alumnae don't use banking apps or don't want to write a check to a person they don't know or trust to handle the money responsibly. We wanted to open a bank account for the alumnae association but we're not sure where to start or what we need to do. I'm going to a local bank over the weekend to try to get some answers, but I was wondering if anyone had insight or had set up a bank account for their alumnae/alumni organization. Thank you in advance for your help!

[Kevin]

From an organizational standpoint, this might be where you start to get your organization's legal structure in place.

For Alumnae associations, you'd form a not-for-profit corporation under your state's law, obtain an EIN from the IRS. Then you'd want to apply for 501(c)(10) status for your corporation under the IRS code so that you'd be tax exempt. If you're really swinging for the fences, while you're at it, incorporate a foundation and apply for 501(c)(3) tax exempt status for it so that alumnae could write off their donations.

This is no easy undertaking.. even as a lawyer, I've only gotten about 2/3 of the way for my own group. Obtaining 501(c)(10) status is a substantial undertaking.

[33girl]

How many events are you going to be having and how often are you going to have to pay a vendor?

Also are the people involved all going to be people you knew in your chapter or are you reaching out to people from all different collegiate chapters who live in the city? (I’m in Pgh too and I thought that you guys had an alum chapter. Unless an association is a different thing.)

[SigDelt91]

Kevin, thanks for the suggestion. When I was looking for other alumni/alumnae groups' sites, I found something on Alpha Sigma Phi's website that said alumni chapters should file with the IRS as a small business or a self employed business to get an EIN (http://alphasigmaphi.org/Websites/alphasigmaphihq/images/Officer_Resources/Obtaining_an_EIN.pdf). Do you think that applies to what I'm trying to do?

33girl, we're actually just starting to get off the ground. We had a homecoming tailgate back in October, but that was handled by another alumna who has been running that for a number of years. Our first big event was this past weekend for Founders Day. We're planning to do Happy Hours over the summer, and we hoped to be able to pay for some food and/or drinks at those. We're hoping to have more events as we gain traction and get more interest, but it's been a slow process so far. Our problem is a lot of places want a deposit or down payment for events or large groups. Right now, we're reaching out to all the alumnae from the chapter at Pitt and all the alumnae in the Pittsburgh area from different chapters, so some are more invested and involved than others. We've had a few different versions of alumnae groups try to get off the ground, but this is the first consistent group in a long time. Our undergrad chapter at Pitt was made alumnae in 2016, so maybe that's what you're thinking of?

Titchou, we have maybe $100 right now, so I think you're right and we could probably skip that for now. I think the safest thing is to keep the money from being controlled by only one person. I'm going to look into the EIN and see what that entails.

Benzgirl, I'm going to try to reach out to an accountant after my meeting at the bank. We used PayPal and Venmo this past weekend, but the problem was that we didn't have available funds or a bank account to pull money from to reimburse people paying in cash. We've been doing everything by Google form, and I have to check if we can do payments through that. Our national office doesn't have any alumnae resources- they're hands off and let each alumnae group do their own thing. We don't have any guidelines or any specific structure. As far as I can tell, our group in Pittsburgh is the only SDT alumnae group trying to formally organize (monthly meetings, events other than Founders Day, etc). I think we're going to try looking at other sororities' websites to see their alumnae resources and how their local alumnae groups are structured. Thank you for the idea!

[navane]

Hi SigDelt91,

My best advice is for you to first contact the banking institution you intend to use and seek their advice on their requirements for opening a new account. Here's the thing, "generally" you would need an EIN in order to open a business-style banking account at a local bank. That instruction sheet you found online from Alpha Sigma Phi is helpful. However, there is one component of those instructions that may trip you up - non-profit status.

Look at the following link - https://www.irs.gov/businesses/small...ou-need-an-ein

That IRS page outlines the entities which need an EIN. Your alumnae chapter would probably not fall under any of those categories. Your alumnae chapter is not a non-profit in and of itself; but, it might be able to piggy back under your SDT headquarters' non-profit status. However, it sounds like your organization is saying that they consider alumnae chapters to be wholly independent entities. Then, to make it more complicated, your filing status also determines if you should file an IRS Form 990 or Form 1120 to submit your taxes every year; but, I won't get into that right now.

I also agree with the suggestion to reach out to other alumnae chapters from your organization to find out what arrangements worked best for them.

So...

1) Contact your local bank for requirements

2) Ask other SDT alumnae chapters for best practices

3) Consult a tax professional

[33girl]

No, I wasn’t thinking of the undergrad chapter. When I was involved in Pgh alum Panhellenic there was a SDT rep.

[Titchou]

Banking laws have changed greatly since 9/11. Unless you have a great deal of money (thousands of dollars), I don't recommend filing for a 501C designation.It alone can cost $1000. Banks will require an EIN or SSN to open an account...it's the law. SO unless you have someone you trust implicitly to use their SSN and not rob you, you aren't going to be able to open an account.

[Benzgirl]

Our alumnae chapter is not tax exempt under the law. Make sure you consult a tax professional as well as your national on how to structure the group.
Some groups use PayPal and Venmo. Others still have members pay in advance by check. Don't get too complicated out of the gate.
Ask your national for the alumnae handbook or reach out to other alumnae chapters to see how they operate. Find out if there are requirements for good standing, such as sponsoring a collegiate group.

[SigDelt91]

Hi all,
Thank you again for all the suggestions! I thought I'd give you an update from my meeting at the bank. I sat down with the assistant branch manager and explained the situation. She said that the first thing we would need was a letter from our National Office giving us permission to use the sorority's name and to open a bank account associated with them. We would also need a copy of their 501c forms, and we would need to file for a tax ID number. We would also need to register our "business" with the state of PA and submit a list of board members allowed access to the bank account to both the bank and the state. We would also need a $500 minimum in our account every month or it would be closed. After we submit all of this, they'll send the paperwork to loss prevention and if they approve, we'll be allowed to open a bank account. Unfortunately, for a variety of reasons, we don't think we'll be able to open a bank account at this time. I'm not sure if this is the same at every bank or even in every state, but I thought you would all find this interesting.

33girl, interestingly enough, there's a Pittsburgh SDT Alumnae League registered with the state of PA. There's no log of who registered it with the state or any board members, and there's no information on when the group was registered with the state.

Thank you all again!

[33girl]

Registered with the STATE?? I would definitely contact Pgh Alumnae Panhellenic. Some of those ladies have been around for decades and they might be able to help you make connections as to who that is.

http://www.pghalumpanhel.org/