Start an Engine Club - Why Not!

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I was lucky to be a youngster at the tail end of steam, and am forever imprinted with that experience. I put it down to being enveloped in those clouds of smoke and steam at the railway station, and then the train ride with the coach windows wide open so as to be sure to catch the engine's smoky breath. I remember steam trucks with their chain drives working at the docks and dribbling hot embers along the road. Out in the country, the road crews were still using steam road rollers. Great fun for us kids, when we got to play on one after the workmen had left for the day. Today, finding a steamer takes more effort, but take me within sniffing distance of one and I can home in on it with just as much vigor as locating that first cup of “Joe” in the morning.

Thankfully, club meets, engine shows and museums now provide the best opportunities for seeing steam. The same can be said for gas engines to some extent. While many of us have an engine or two, the shows and club meets offer the opportunity to see a wider variety of engines or to see the unique, the rare and the large. It is the place to find the parts and uncover the bargain.

Clubs are a major supporter and organizer of shows and have to be commended for this. Without them, the antique engine community would be very fragmented, probably much smaller and less interesting or exciting. So for those of you out there that are involved in supporting shows and museums, I would like to thank you for giving the rest of us an enjoyable experience. For those of you who are not in a club, I would like to encourage you to join one or help form one, which is not as complicated as might first appear.

As clubs provide the backbone to our pastime, it is worth looking at the procedure involved in forming one. Recently, such a group of like-minded enthusiasts in Vermont did just that and incorporated their club. This article provides readers with a “how to guide” as it follows the procedure taken by the “Green Mountain Flywheelers Antique Gas and Steam Club.” It is hoped that that this guide might be useful in encouraging others contemplating such a move

The first step in making a club's activities a reality is to organize it as a nonprofit corporation. States have set up this procedure just for this purpose. This form of corporation is a formal organization of people committed to a particular purpose that will benefit `that community' such as a charitable or educational concern or in our case, an engine club. It is not for individual profit and has no shareholders nor does it distribute profits. Once incorporated, the club is regarded by the law as a person, and it will have a name, a birth date, place of business and the legal status to own property. Incorporation allows the club to take on the financial responsibility of opening a bank account in its name and obtaining group liability insurance for coverage of its members and spectators at shows. It also provides formal recognition for the club.

You should then become familiar with the process and requirements. Today, this is easily accomplished by using a computer to visit the “Secretary of State” website and look for the reference to nonprofit corporations. For Vermont, there was a lot of helpful information on their site and recommended reading was “A short Guide to Vermont's Nonprofit Corporation Law.” This guide is written for the layman and devoid of legalese jargon. It walks you through the definition of a nonprofit corporation, the process of incorporating, various options, and discusses taxes and tax exempt status.

The second item to review is the application form for incorporating (called “Articles of Incorporation Form”) which is only a couple pages long. It is online and is basically fill in the boxes, make selections from multiple-choice lists or check applicable boxes.

I did sample other states and the procedure seems very similar, although some states make you work harder to find the information and lack the helpful guide. If you don't wish to take the computer route visit your Secretary of States office or alternatively write to them for the relevant application forms together with any explanation or guide booklets.

When you are ready to make a start you will need a few bold people (aka volunteers) to step forward and take the lead. Normally, a minimum of three positions have to be named, president, secretary and treasurer. In our case Robert Felch took on the responsibility to act as president of the organization and to carry out the process of incorporating.

The Incorporating Procedure 

To proceed with the application you will need to furnish the following type of information:

Corporation Name. The corporation must be given a name; this must not be the same as or one that can be confused with an already registered corporation in your state. In our case we called ourselves:

“Green Mountain Flywheelers Antique Gas and Steam Engine Club.”

Corporation Type. This is a multiple-choice check the applicable box question. The two main types are “Public Benefit” or “Mutual Benefit” corporation. (There are others such as Housing Corp., Worker Cooperative etc. that are not applicable). A Public Benefit corporation is usually associated with a charity organization that will apply for tax exempt status whereas a Mutual Benefit corporation is an organization formed for the benefit of its members where individuals pay to join, such as an antique engine club.

Name of Registered Agent and Address. This is a person who is a resident of the State and who acts on behalf of the corporation to receive legal papers should they ever be served. (This should not be a concern for an engine club, remember that this is a general application form and covers a wide spectrum of organizations). In our case Bob Felch who was our representative entered his name and address.

Directors' Names and Address. The Board of Directors function is to manage the business and affairs of the corporation. They are responsible for appointing the officers of the corporation such as president, vice president, secretary and treasurer. The Board of Directors is elected by the members of the club. To get things rolling however, especially for a small club, these can be initially designated positions or left open to be taken care of later.

Members' Names and Addresses. Names of some key members can be inserted, but the whole membership need not be entered.

Purpose of the Organization. This is a multiple-choice selection from such categories as charitable, civic, educational, athletic etc. Our club purpose was stated as “educational”.

Tax Exemption for nonprofit corporations. This is wording relevant to an organization that is going to seek tax exemption. (More on this below). The club is not a charitable type of organization and therefore we checked the appropriate box.

Do you plan to apply for tax-exempt status with the IRS? We checked No.

Dissolution. This is a statement that specifies what is to be done with the clubs assets if the club is ever dissolved. The instructions provide a prepared text for insertion if the club is seeking tax exemption. If it is not then the instruction is to delete the text.

Anticipated Paid Staff after 1 Year. (Note this was optional information). This is a multiple-choice selection. In our case this was entered as none.

Anticipated Budget after 1 year. (Note this was optional information). This is a multiple-choice selection. An estimate can be made by multiplying the number of members by the membership fee.

Anticipated volunteer staff after 1 year. (Note this was optional information). This is a multiple-choice selection. In our case we specified 10-19.

Signature, Name and Address. This was signed by Robert Felch.

Fees Non-profit corporation $75.00. Send in the application and a check.

Once the form is completed and the fee paid and providing there is no conflict with the name a “Certificate of Incorporation” is issued by the State.

The only follow on requirement for the State of Vermont is the filing of a biennial report. This is mailed out to the club at the appropriate time by the state to ensure the club is still in compliance with the non-profit incorporation requirements. There is no additional fee providing there are no paid officers, directors or employees.

Other Considerations 

Bylaws. Every nonprofit corporation is expected to have bylaws. For Vermont there is available on the Web site a copy of “Model Bylaws.” Bylaws are the rules to be followed in the running of the club; they are for internal use only and are not filed with the State as part of the application. For a small club with simple operations these can also be very simple.

To write bylaws the club has to evaluate its mission, consider how it wants to carry out that mission and then adopt bylaws that provide the rules to follow. Bylaws can cover a wide range of details such as purpose of the club, adoption of the board of directors, election of officers, membership requirements, dues and finances etc. However other than the bylaws not conflicting with the articles of incorporation there is wide latitude as to what can be in them.

Tax Considerations. Nonprofit corporations have to comply with both the State tax statutes and the IRS requirements. The club usually gets an “Employer Identification Number” (EIN) issued by the state tax department; this is the equivalent of a persons Social Security Number and would be used in opening a bank account in the club's name.

For Federal Tax purposes nonprofit corporations can file for tax exempt status, however this is reserved for corporations that operate for so called public benefit purposes such as a charity. A club such as an antique engine club, however, comes under the classification of a mutual benefit corporation, formed for the benefit of its members and cannot file for tax exemption.

The tax situation however can be greatly simplified in the case of a small club with a relatively simple operation. For example money is raised only from membership dues and then subsequently paid out for the incorporation fee, insurance coverage and to cover costs of engine shows and club meets resulting in basically zero cash accumulation from year to year. Not soliciting or accepting donations also keeps the operation simple. Usually if the finances are kept below a certain threshold there are no taxes due but this probably varies between states.

Now for the disclaimer! Like those financial statements you get at year-end I am offering the same advice. If you intend to accept donations, have paid employees and accumulate property and assets etc. you should obtain professional tax advice. Dealing with the complexities of the tax regulations is beyond the scope of this article as well as my knowledge (furthermore, it does not make for interesting reading).

So how is the club doing? It's a little like build it and they will come as our membership has been steadily growing to reach 90 members as word gets around. As the club builds up and reaches a critical mass it helps sustain it, attract new members and makes for more interesting club meets.

From my experience, these are the benefits to starting a club:

  • It widens your circle of friends and guarantees you will meet a lot of interesting people.
  • Help in finding parts, trading engines or providing leads on that engine still way back in a barn.
  • Unlimited advice - priceless.
  • Support of local community. Helps in the success of town events, county shows historical and education events.
  • Club engine show. Provides a venue for members to show off their engines and the public to see a wide variety of antique engines and related equipment. (This is how I got hooked, I became fascinated by the ingenuity of the hit and miss engine).
  • Easier to get up a car pool to attend engine shows now gas prices are major cost.
  • Stimulate interest in our young folk; bring them back from the virtual world of video games to the reality of practical skills - hopefully.
  • Providing its members social events and workshops to keep the interest alive during the winter season - a must in Vermont.