by Pete Mazzaccaro
The Chestnut Hill Community Association recently received word that its application to be a Pennsylvania nonprofit 501(c)(3) organization had been approved, paving the way for an organizational remake that has been in the works for nearly two years.
The Association has, since its founding in 1948, been a simple Delaware nonprofit corporation – meaning simply it was a nonprofit corporation registered in the state of Delaware. As such, the company has not enjoyed many nonprofit perks that 501(c)(3) status offers. The new status will exempt the CHCA from some federal income taxes and allows it to receive unlimited donations from individuals and other organizations and corporations.
“What we want to do now is just let people know about the change,” said former CHCA president Brien Tilley, under whom the effort to explore and then apply for 501(c)(3) status began. “This is a pretty big step and we’ll be working over the next few months to discuss it with [CHCA] members.”
The steps remaining, Tiley said, include educating the association’s membership and putting the formal change to a vote of the members, likely during the organization’s annual meeting in April. Tilley said that the organization also will be working before that vote to finalize a new set of bylaws for the newly established 501(c)(3).
The technical re-creation of the CHCA actually required the formation of a new company – a Pennsylvania nonprofit corporation. Hill resident John Falco, an attorney with the firm Pepper Hamilton explained it as follows:
“The task involved spinning out the charitable activities of the [CHCA] from the operations of the Chestnut Hill Local and creating a new nonprofit corporation to assume the charitable activities of the CHCA,” he said. “Once the new corporation was created, the CHCA submitted an application to the IRS for status as a public charity under Section 501(c)(3) of the Internal Revenue Code. The 501(c)(3) status was granted in November 2014. While the Community Association activities will be conducted by the new entity, the Chestnut Hill Local will continue to operate under the “old” nonprofit corporation.”
Tilley said that the CHCA board as it is now constituted will continue to govern the new CHCA. A new board will oversee the Chestnut Hill Local under the old corporate structure. Tilley said that board – it’s makeup and directive – is still being worked out. In all likelihood, it will serve at the pleasure of the CHCA board. In other words, the CHCA will continue to own and publish the Local.
Why go 501(c)(3)? Falco said there are three key benefits:
exempt the organization from taxes,
create more opportunities for public or private grant money that require 501(c)(3) status for eligibility, and
allow for the solicitation of tax-deductible contributions “which individuals and organizations are more likely to donate because tax law permits such donors to deduct their contributions from taxable income.”
Tilley said he was pleasantly surprised by how quickly the process went after the application was filed. He said he was grateful for all the hard work put in, not only from CHCA board members and staff but from Falco and Pepper Hamilton.
“It was something that might have taken as much as a year,” he said. “But it only took three months between filing and getting approval.”
Falco said his firm spent more than 100 hours on the project, all pro bono.
“Pepper took this project on because it fits its pro bono mission,” he said. I was eager to help since I live in the community and it was an opportunity to use my talents to give back.”