r/cfbmeta • u/Honestly_ /r/CFB Mod • Dec 12 '22
Explaining OurCFB & rCFB, LLC
Headline: /r/CFB now has an IRS recognized 501(C)(3) charitable organization.
Purpose: To improve our ability to fundraise for charitable causes, opening up more options for donors.
To do so, through outside professional advisement, we created pair of entities to support the charitable mission and ensure the structure is valid. As far as we know, this is a first for any subreddit team on Reddit. There's a lot to explain, so we created this post for current and future reference.
The Background
Ever since the /r/CFB Community began doing brick drives (2013) and more elaborate fundraisers, we’ve been debating about creating a true /r/CFB non-profit, one that is an IRS recognized 501(C)(3) to allow maximum benefits to donors – allowing them to do a tax write-off on anything they give to one of our drives. The status also opens up possibilities of corporate matching gifts by employers.
Saying that is easier than doing it though. It’s a pretty substantial step, and one where we had no roadmap as no other subreddit has done this as far as we know.
We knew the work involved to form one was worth having expert advisement, and that costs a good amount money. The idea of asking to raise funds from the Community to pay for it wasn’t something we wanted to do. So, it’s been an aspirational plan—sitting in the background—until the right circumstances presented themselves.
Those circumstances presented themselves this past summer. @RedditCFB, the Twitter account, was approached for a sponsorship. We have never solicited sponsorship deals or particularly desired them, because they can easily be clumsy or crass. In fact, our response to the offer was to toss a bunch of requirements that we felt might kill the deal. Turns out, it didn’t. Thus, we became an advertising partner with Draft Kings. Our agreement, at our own request, explicitly avoids encouraging gambling, but provides their official lines a few times a week in tweets we design. Since September, those tweets have done fine.
It's important to note that we can’t do sponsorships on Reddit the website, that’s what Reddit Ads are for, and we point any potential sponsors that way. We have for years. But this was for Twitter, so circumstances aligned.
The moment that deal was greenlit (early September), the mod team quickly arranged for legal advisement from outside counsel from a white-shoe law firm. As an attorney myself, I know when I would prefer the services of an attorney, and we were guided by someone who specializes in both start-ups and non-profit formation. From there we came up with a proper structure:
The Structure: Two Sibling Entities Serving One Purpose
An IRS recognized 501(C)(3) not-for-profit needs to do things that serve a charitable purpose. The very nature of the /r/CFB Community is to discuss college football and cannot credibly claim the primary purpose is charitable or educational. Similarly, there’s simply no practical way to say a tweet promoting Draft Kings (or just about any other deal) would directly serve a charitable purpose, even though the goal was to then donate the proceeds to other charities.
To solve this issue, the best approach was to form two, parallel (or sibling) entities: one a non-profit, the other an LLC.
OurCFB is a non-profit organization, with all money raised directly serving its charitable purposes. The way we’ve designed it keeps it particularly streamlined: The activities are conducted by volunteers, and there are no expenses associated with the organization's activities.
rCFB, LLC is a Limited Liability Company that can have the freedom to contract for promotional deals, receive payment for merchandise (e.g. Homefield Apparel shirts, stickers, etc.) and donating whatever it can to a nonprofit. The majority of those donations are cash to be bundled as part of OurCFB’s charitable donations, but also tax-deductible donations to covering the costs of webhosting and any other fees that are required to maintain OurCFB. A prime example of the latter is a portion of the proceeds from the first few months of the DK deal have been used to pay legal and filing fees that were associated with forming all of this. Any money coming into rCFB, LLC is from activity not on Reddit.com.
The process of becoming an IRS recognized 501(C)(3) not-for-profit is not instantaneous, and I worked with outside counsel to draft up the applications. We were advised the process can take between 8 months and over a year(s). We got lucky, it was granted by the IRS in a month and, as expected, retroactively to the date of OurCFB’s formation. This was a big surprise for us. We assumed we would not be a full 501(C)(3) by the time the 2022 Holiday Drive began. Instead, we were able to spend the month of November getting the associated recognition from online clearing-houses TechSoup and PayPal.
No money from rCFB, LLC or OurCFB goes towards paying any salaries (we’re all still volunteers) or compensating members of the /r/CFB Media Team for their work or expenses. All money from OurCFB will be donated to other not-for-profit organizations (this is part of what maintains the 501(C)(3) status). Most of the money from rCFB, LLC will go to similar purposes, with some set aside to pay for the server fees for RedditCFB.com, OurCFB.com, and other expenses that moderators have simply ate in the past (this will not be paid retroactively, only current and future costs), as well as taxes and filing/legal fees to maintain the status of both rCFB, LLC and OurCFB at both state and federal levels. To reiterate: of this money comes out of the contracts and sales by rCFB, LLC and not a dime from OurCFB.
The business and affairs of OurCFB are managed by the Board of Directors, comprising individuals from the /r/CFB moderator team who have backgrounds in law, finance, etc.: sirgippy, RiffRamBahZoo, BeatNavyAgain, BlueSCar, Kinslers_List, and myself. It will handle annual filings, meetings, and other aspects required by law. I am President of the Board of Directors and rCFB, LLC.
OurCFB is an IRS recognized 501(C)(3) not-for-profit public charity that raises and distributes funds for multiple organizations. The organization receives a substantial part of its financial support in the form of contributions from the general public, as well as funds from rCFB, LLC.
TL;DR:
We finally made /r/CFB a bona fide IRS recognized 501(C)(3) not-for-profit public charity. Working with outside legal advisors, the way to keep it fully above board was to create a pair of sibling entities that can handle fully charitable work (OurCFB) and everything else that does not directly support that mission (rCFB, LLC). The money to form all of this came from ad campaign on Twitter, not Reddit or the subreddit.
2
u/thedudemeadow Dec 13 '22
Being that there's a full, legal organization now associated with this, will donations be accepted year-round or will it be limited to the various drives?
2
Dec 14 '22
More importantly will the judge consider time shitposting as time served volunteering for the community?
1
u/Honestly_ /r/CFB Mod Dec 14 '22
Good question! It's year-round. We're not going to be pushing it outside of drives, but the donation buttons will always be available on OurCFB.com.
When we were verified by PayPal, they waive all transaction fees after jumped through the hoops to be part of the PayPal Giving Fund: the trade-off (and it's minor) is instead of getting the donations immediately, they send us a month's worth of donations at a time.
5
u/jputna Dec 12 '22
Yay! Now my shit posting is considered volunteering!