501(c)(3) status
The Commonwealth of Virginia State Corporation Commission (SCC) and the Internal Revenue Code (IRC)
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For the public: Donate with assurances.
With the public’s interest in mind, 501(c)(3) regulations are rigorous.
501(c)(3) status will be in effect throughout the limited fundraising campaign.
Further, 501(c)(3) donations have a tax benefit.
What happens to donated funds if the funds are insufficient?
If donations are insufficient to hire a presentation team, or if donations are sufficient to hire a team but prove to be insufficient for the team to complete its task, HSe4Metrics will decide whether to proceed or how to proceed, but will have the option to contact the applicable governmental agencies and dissolve.
Dissolution of the 501(c)(3) per IRC Article XI: “Assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose. Any such assets not so disposed of shall be disposed of by a Court of Competent Jurisdiction of the county in which the principal office of the Corporation [HSe4Metrics] is then located, exclusively for such purposes or to such organization or organizations, as said Court shall determine, which are organized and operated exclusively for such purposes.”
For a commercial sponsor: In the event the limited fundraising campaign is successful and a sponsor is installed, will the 501(c)(3) status continue?
If the sponsor is a publicly-traded corporation it will have a fiduciary obligation to its shareholders.
The sponsor might therefore insist on having direct oversight and accounting for how the potentially $10s of millions in operations funding that it donates is used for the HSe4Metrics social media app. The sponsor’s highly trained staff including accounting and legal may be exceptionally suited to perform this function. Moreover, the sponsor may insist that there shall be no third-party interference as in the case of third-party 501(C)(3) directors, as volunteer directors are installed and replaced as their terms expire.
The dilemma for a potential sponsor in deciding to be the national sponsor is that if HSe4Metrics continues with its 501(c)(3) tax status, government regulations require having a board of directors (with a new board member replacing a board member whose term expires). The risk of this requirement to the sponsor, the sole funder of the $10s of millions, is that third-party volunteer directors might inadvertently at some point begin to impede real-time decision-making by the HSe4Metrics staff. For the staff to operate at peak efficiency, it must have instantaneous flexibility in maximizing the K-12 audience, key to the app’s hard-number metrics success in K-12-student performance.
On the other hand, by ending the 501(c)(3) tax status, the result consequence for the sponsor would be the loss of the generous 501(c)(3) tax benefit.
HSe4Metrics’ duty is to ensure that the HSe4Metrics social media app remain free-access and ad-free, regardless of 501(c)(3) tax benefits.
The State Corporation Commission
Regular business hours are from 8:15 a.m. to 5 p.m., Eastern Time Zone, Monday through Friday.
804-371-9733 or 1-866-722-2551