Incorporating a bike club?

[li10up]

Pardon me if I do not use the correct legal language...I'm not an attorney nor do I play one on tv. But isn't it a good idea to incorporate a club to limit liability to the club and not the members/volunteers individually? Our club website says that we are a non-profit but one of the officers recently said that we are not. I lead a group ride and I would not want to be held personally liable if something were to happen on the ride. How difficult/expensive is it to incorporate?

[velogirl]

incorporating is different than being a not-for-profit (although one organization can be both). but neither is necessary for a club to have a good liability insurance policy. I wouldn't worry about it too much. do riders sign a waiver/release form when the join the club and/or when they participate in rides?

[Irulan]

You'll need to study your state laws as they pertain to organizations. Our club is both incorporated and a 501(c)3.

First, having your 501 status is the only legal way you can say you are a non profit. You may be one, but you need to be registered as on with the IRS in order to declare it.

In my state, we needed to be incorporated and registered with the state before we could apply for and receive our 501.

I'd try and connect up with other clubs in your area to see what they did. Maybe they have a liability form that you can use as a template for your activities. We got lots of help from other local clubs that had btdt for setting all this up.

I highly recommend following through with this. As for blowing it off, well- all it takes is one sue happy rider who had some sort of unpleasant experience to ruin everything. If you do not have the protection of an organization and/or insurance, it is a small thing for a plaintiff in a lawsuit to go after individual assets, get the group shut down and all sorts of other fun things. Being well organized will protect you individually from actions against the group.

I know for mountain bike clubs with IMBA affiliation, Mackay insurance provides very good policies for a very reasonable cost. There ought to be something out there for road clubs too. And a waiver is only as good as the lawyer that's trying to pick it apart.

I am not a lawyer, nor a tax attorney but I do have my own organizations experience to go from. Please check with some professionals about what is recommended for clubs in your state.

I.

[Nokomis]

We're in the process of incorporating as well.

Irulan - are you an officer in your club? I'm curious about the decision and workload connected with 501(c)3 status.. on first analysis we found that to be a poor fit four our club, but I'm curious to get some working examples to better understand the choice.

[uforgot]

I started a local soccer program here in Missouri and what Irulian says is exactly what I had to do. You can say you are non-profit, but unless you apply for the 501 and incorporate, you aren't. At least in Missouri. Then you have to reapply every year.

[PscyclePath]

Pardon me if I do not use the correct legal language...I'm not an attorney nor do I play one on tv. But isn't it a good idea to incorporate a club to limit liability to the club and not the members/volunteers individually? Our club website says that we are a non-profit but one of the officers recently said that we are not. I lead a group ride and I would not want to be held personally liable if something were to happen on the ride. How difficult/expensive is it to incorporate?

As Irulan noted up above, there's a difference between being a non-profit organization, which is a specific tax-exempt status, and simply being an "unprofitable" organization ;-)

If liability is an issue, you might want to affiliate your club as a member of the League of American Bicyclists (http://www.bikeleague.org) and taking advantage of their insurance program offered to member clubs, advocacy groups, and their certified instructors... Details at http://www.bikeleague.org/members/club/insurance.php.

This policy would cover general liability for club officers and ride leaders, as well as provide secondary medical coverage for club members on club rides, as well as for guests on their first ride with the club. Special policies can be purchased for ride events on a per rider basis. It's worked well for our local groups here.

Tom

[Irulan]

We're in the process of incorporating as well.

Irulan - are you an officer in your club? I'm curious about the decision and workload connected with 501(c)3 status.. on first analysis we found that to be a poor fit four our club, but I'm curious to get some working examples to better understand the choice.

I was just elected for a third term of president.
Our club is focused on advocacy and trail building. Translate that to needing grants to fund stuff. You really can't apply for grant funding unless you have a 501(c)3. We had potential corporate sponsors telling us, "what, no 501? Bye".

The 501 application is a pain in the butt. It's your typical IRS form with 100 pages of instructions for a 10 page application. It requires a set of bylaws, a copy of the state incorporation, other things. We got in when the fee was $150, it's since gone up to $400 I think. The process is lengthy: once they get your application, you get a letter acknowledging that your have applied, it can take up to year+ to get approval. The designation is retroactive for 48 months tho. AFAIK we do not have to reapply every year with the state.

Since then, IMBA ( our national affiliate) has initiated a "chapter " program which will enable clubs to use their 501 instead of having to apply for their own. I wish that had been available sooner but oh well.

Having the 501 not-for-profit has really legitimized our organization. People (read: authorities, land managers) take us seriously when they know we have that designation.

In the last two years we've gotten four grants:
$2200 Conservation ( tool ) grant from REI
$1000 Kona Free ride Grant
Non monetary RTCA grant from the National Park Service
Software grant from ESRI to get ArcGIS for $100 ( retails for $2500)

Our group -
www.fttrc.org

hope this helps.

[Nokomis]

Thanks Irulan ~ that was perfect! And kudos for the work you & your club are doing.

[Irulan]

I forgot to add that incorporating most certainly does protect individuals in an organization. (IANAL usual caveats apply) In most cases, the orgaznization is sued, and the assets of individuals and individuals are protected in the event of a suit against the organization.

I don't recall all the details, but I went to a talk given by the former president of a club that had gone through a lawsuit. Having a solid organization made the difference in how far the lawsuit could go.

[velogirl]

gosh! I hope no one thought I was making light of your question. seriously, if your club is incorporated (whether or not they're a not-for-profit), you have a layer of financial protection (ie you probably won't lose your house or your kid's college fund if someone sues the club or you as a ride leader).

this question is posed every so often to the folks at USA Cycling -- "has there ever been a successful lawsuit against a coach or a cycling club?" we've been told there hasn't. that doesn't mean that someone can't sue you, but it probably means they won't win.

cycling is a risky activity. cyclists assume that risk when they hop on the bike. the few lawsuits I've heard of have been family members of those who were injured/killed in a cycling incident. those are the folks who don't understand the risk. I've also heard of one lawsuit against a club where a rider hit a runner on a multi-use path. I don't know the outcome of that case.

Irulan gave you great advice. as she said, every state is different. if you're truly concerned, check with the club officers to see if the club has liability insurance and if it covers the activities of members/volunteers.

[li10up]

Thanks everyone for the info. When I raised this question the current officers appeared to not want to talk about it...that is when I got concerned. I've heard we have some sort of insurance but I will check into that to make sure.

So can you incorporate without being a non-profit? How do you do that?

[velogirl]

incorporating (ie forming a corporation) is a form of business structure, just like an LLC (limited liability corporation) or a sole proprietorship. check with your state, but in CA you have to file with the secretary of state (initially to set up the corp and then annually).

becoming a not-for-profit is a completely different process. there are many different types of not-for-profits as well, depending on the mission of the organization.

[indysteel]

J- Check out the website for the Texas Secretary of State. It's a good source of information for information and forms regarding incorporation and NFP status.

[Irulan]

Thanks everyone for the info. When I raised this question the current officers appeared to not want to talk about it...that is when I got concerned. I've heard we have some sort of insurance but I will check into that to make sure.

wow that's kind of scary.

So can you incorporate without being a non-profit? How do you do that?

I believe so, the two are not intertwined.