All non-incorporated clubs are subsidiaries of the MIT Alumni Association. The recommended bank institution is the MIT Federal Credit Union. Please ask your Association Staff Liaison for the Institute’s Tax ID number (TIN) when you open a bank account. Any interest income on the account is reported to the IRS under that number.

The alumni community and the Association must exercise due diligence and establish one of the staff of the Association as signatory on the account, especially when the Institute’s TIN is used. This is in case the primary user becomes unable to manage the account, or does not handle the account responsibly. The Association signatory must be able to access the account on behalf of the community.

Follow these steps to establish an account:

1. Obtain and complete the application paperwork from the bank chosen (the Association strongly recommends accounts be opened at the MIT Federal Credit Union).

• Account Title should be “MIT Alumni Association - club/organization’s name”

• Our Business Type is a non-profit 501 (c)(3) (unincorporated association)

2. Forward the paperwork to your Association Staff Liaison who will make sure that the rest of the application is completed, including the Institute TIN, and have the Association’s authorized signer (generally the Association CEO or CFO) to complete the document.

All MIT alumni communities have insurance protection under the general liability coverage held by the Institute. This applies to both separately incorporated organizations and those that are not. The insurance provides coverage in the event of an occurrence at an officially advertised alumni community-sponsored event gives rise to a claim. Please review the Insurance Summary and Memorandum on Indemnification. For events that pose concern for danger or accident, organizations should have participants sign the following: Liability Release, Waiver, Discharge, and Covenant Not to Sue.

Additionally, MIT provides coverage for an alumni community's directors and officers. Individual insured means a past, present or future duly elected or appointed director, officer, trustee, trustee emeritus, executive director, department head, committee member (of a duly constituted committee of the Organization), staff or faculty member (salaried or non-salaried), or employee of the organization or Outside entity executive. Coverage will automatically apply to all new persons who become individual insured’s after the inception date of the policy.

MIT Directors and Officers Liability insurance coverage does not cover “bonding” for an alumni community treasurer. “Bonding” refers to insuring the treasurer (and, if required, corp. officers with access to funds, or authority to make decisions regarding alumni community spending) with a fidelity or crime bond. The community must procure this bond on its own. Most bonding companies (or insurers) require the coverage to be placed through an insurance broker. The broker will need certain underwriting information from the community, like the budget, description of the treasurer’s duties, and actual spending from previous years.

Bonds can be purchased for different limits and different time frames. Bond premium will be based upon both, along with extent of sound accounting practices and controls of the chapter.

To take the fullest advantage of this service, the following guidelines should be observed:

• Do not allow volunteers to serve alcoholic beverages at an event. This should be done by an establishment that has a liquor license and carries host liquor liability coverage (restaurants, hotels, and professional caterers).

• Be aware that if your alumni community hosts an event in someone’s home or private property, the property owner’s insurance will be the primary object of any possible claim.

MIT alumni communities can choose to use the Institute’s 501 (c)(3) status thereby entitling them to be exempted from Federal taxes on interest bearing accounts. We recommend alumni communities use the Institute’s tax exempt status.

For particular state exemptions for event purchases, facility rental, catering etc., the alumni community must obtain its own state tax-exempt number.

Some MIT alumni communities in areas with large alumni populations have chosen to become separately incorporated. These communities have obtained tax-exempt status in accordance with the 501 (c)(3) regulations. A separately incorporated alumni community would use its own tax-exempt number for business transactions on behalf of the organization.

The IRS

Membership Dues

Alumni communities qualify as charitable organizations either under the Institute’s or their own separately incorporated 501 (c)(3) number. The IRS has ruled that membership fees paid to a qualified charitable organization are deductible as charitable contributions to the extent that such payments exceed the monetary value of the benefits and privileges available by reason of such payments. (Basic dues generally do not exceed the value received, and are therefore not deductible).

Alumni communities are advised to consult with a local tax attorney with regard to their finances including the potential deductibility of membership dues. Do not promote membership dues as tax deductible until you have received confirmation from a local authority.

Donations

The IRS requires charitable organizations to inform donors of the value of any quid pro quo gifts. Quid pro quo gifts are defined as gifts resulting in benefits received by a donor in return for a charitable contribution. Any charitable organization soliciting quid pro quo contributions in excess of $250 must provide a written statement that informs the donor of the amount of the payment that is deductible and gives a good faith estimate of the value of the quid pro quo.

While communities’ dues are generally less than $250, there are some situations where gifts of $250 will be needed. In such cases, we suggest the following language: “An MIT alumnus/a may deduct as a charitable contribution Club dues paid in excess of the value of services or material goods provided by the club”.

Tax Filings

Separately incorporated 501(c)(3) alumni communities are responsible for filing the proper State and Federal taxes and any forms the IRS requires, and must provide the Association with a copy. For those communities that elect to use the Institute’s tax-exempt number on their income-producing assets, there is an obligation to report all income received to the Association; however separate tax filings are not required.

For alumni communities who have paid administrators, it is the responsibility of the individual contractor to report income earned.