discuss: EIN advantages (was" LDP can't get non-profit status ...)
Subject:
EIN advantages (was" LDP can't get non-profit status ...)
From:
David Lawyer ####@####.####
Date:
19 Apr 2007 01:27:53 -0000
Message-Id: <20070419012758.GA5207@davespc>
> Quoting David Lawyer ####@####.####
>
> > There are still a couple of options: 1. Incorporate or 2. Get an EIN
> > no. to open an investment account and to perhaps: get members exempted
> > from liability??
>
On Tue, Apr 17, 2007 at 05:23:38PM -0700, Rick Moen wrote:
> To the best of my current understanding, the latter simply doesn't work.
> (You keep saying it's possible. If you can find some citations, I'd be
> glad to discuss particulars.)
You must mean an investment account. Awhile back I Googled and found
2 credit unions which advertise that they are welcoming accounts from
unincorporated organizations. You need an EIN number however. I've
got the application for an account with the low-cost mutual fund Co.,
Vanguard. On their application for organizations there are
categories: corporation, partnership, sole proprietorship,
unincorporated enterprise, etc. I believer that we fit into the
"unincorporated enterprise" category and could open an account with an
EIN number plus they want a copy of a document evidencing that we
exist (the Manifesto and the web site url).
But my local credit union said no when I inquired, so some (perhaps a
majority) of the financial institutions would not open an account
for us.
As for exemption from liability, *if* the venue was California, then
the members are exempt to about the same extent that they would be if
LDP were a corporation. See California Corporation Code section
18605: no liability based solely on status as member, director, or
agent of nonprofit association. Some other states have similar laws
(there's a suggested uniform code on this) so Rick probably needs to
mention this stuff in his HOWTO. Here's from the California
Corporations Code:
18020. (a) "Nonprofit association" means an unincorporated
association with a primary common purpose other than to operate a
business for profit. DL: That's LDP
(b) A nonprofit association may carry on a business for profit and
apply any profit that results from the business activity to any
activity in which it may lawfully engage. DL: LDP can sell t-shirts,
etc.
18605. A member, director, or agent of a nonprofit association is
not liable for a debt, obligation, or liability of the association
solely by reason of being a member, director, officer, or agent.
DL: I'm possibly covered by this since one theory of venue is that its
the residence where the member lives and I live in California (near
Los Angeles). Now if the EIN gave LDP's address as my home
address, then there is an even stronger argument that the venue is
California :-). Note that my quoted statement at the start of this
email reads: "perhaps".
The protection of members from liability would likely be better if
LDP were incorporated, since if it's not incorporated, the state laws
like California's 18605 vary from state to state and the venue might
be a state without such laws. In the future, more states are likely
to adopt such laws so then incorporation to limit liability will not
be important. Since LDP is an "international virtual unincorporated
nonprofit association", what are the laws like in other countries to
provide limitations on liability?
David Lawyer
