Risks that Groups and Treasurers Face

Groups just like yours have questions and challenges with collecting money, see if they sound familiar.

Lack of Information – Group autonomy provides legal separation and protects our national offices. Program offices provide some information but leave out quite a bit. Some programs mention that groups can obtain an EIN (Employer Identification Number) and that most groups do not go through the process of becoming tax-exempt. What they do not mention is that most groups have not obtained an EIN, let alone tax-exempt status, nor do they explain the ramifications of not having an EIN. 

Payment, Gift, Donation, or Contribution? – Taxing authorities care about the substance of the transaction; why the money was exchanged. When we look at our group transactions, we must understand why we are putting money into the basket. Is it a payment? No, there are no dues and fees, and we don’t sell the coffee and cookies. Is it a gift? No, the treasurer or group cannot just buy anything they want to. We call it a contribution. However, the funds have an expectation of what they are to be used for; paying the facility rent, purchasing books and literature, and contributing to our program offices. What does it mean when we expect outcomes for our 7th tradition contributions? Is it income to the recipient? Who is the recipient? The group? The treasurer? Not to mention, the IRS and other organizations that we interact with do not recognize the term “contribution.” What’s the difference between Donation and Contribution?*

Transaction Vehicle – How the money is moved and where it goes is definitely part of the equation. Here are some examples: cash under the mattress, a bank, Venmo/PayPal, or a financial clearinghouse like HGOL. Generally, the taxing authority does not concern itself with the vehicle. It’s not the way the transaction is moved, it’s the substance of the transaction itself. For example, the IRS may not know the cash is under the mattress, but that doesn’t negate the cash nor the transaction. The tax law still applies to cash under the mattress. The tax law applies to all transactions.

Risk – Financial & Other Risk – It can be argued that there is little financial risk. Groups do not deal with large sums, and our purpose is very much philanthropic. Also, groups have been “doing it this way” for a long time. We’ve never heard of the IRS imposing a tax bill on a group or treasurer. But consider the principles our programs teach us; we know it’s a violation to speed in our car, even if we’re not caught. That brings us to a type of risk that addicts can understand very well. Our 12-step programs teach us to look for the wrong and make it right; that our perception of the status quo may need a second look, and that although ignorance may be bliss, it’s never a defense, legal or otherwise.     

These challenges may have reinforced questions you already have, or they may have created additional ones. Click on thru to learn the answers and see if you or your group is exposed to any risk.  

More about your risk as the treasurer.