History of Lake Preservation Organization
Tioughnioga Lake Association
P O Box 29 DeRuyter NY 13052
To: Tioughnioga Lake Association (TLA)
From: Richard Alter, President
Date: June 24, 2011
Subject: Potential Lake Preservation Organization
This memo is to memorialize the thoughts and the recommendations made by Hancock Estabrook, LLP, through their attorneys Marion Hancock Fish and John L. Murad, Jr., together with the thoughts expressed by various officers of the TLA, members of the Lake Preservation Study Committee, former Presidents of TLA and others who attended a special joint meeting called by this President of the TLA at the home of Michael Palmer on June 4, 2011. Recommendations from the attorneys are incorporated below.
Last summer, an ad hoc committee was created to study the formation of a not-for-profit, tax-exempt group dedicated to support environmental and conservation concerns at the lake. The membership approved the concept of the study at its September 2010 meeting. An update of committee activities through March 2011, including legal leadership, committee membership and membership survey results, was published in the TLA Spring 2011 Newsletter. The formation of this preservation association will be discussed at the July 9 membership meeting. It is my hope that the TLA membership will support the effort to create this tax-exempt preservation organization for the lake and elects to move forward to do so.
The attorneys were asked to outline the differences between the TLA and a new organization. These are their conclusions:
1. The TLA’s recreational and social activities are not charitable in nature and therefore do not qualify as public charity activities under the Internal Revenue Code 501 (c ) (3).
2. A legally separate entity would have to be established if citizens wished to donate or raise money to fund projects to preserve the lake and obtain the benefit of deductions from those charitable contributions on their tax returns.
3. Further, the TLA’s recreational activities are limited to members of the organization who are property owners or friends. This would exclude consideration of TLA as existing for a public charity purpose under the Internal Revenue Code.
4. While a small percentage of the activities of a 501 ( c ) (3) organization can be non-qualifying, the TLA’s activities are almost exclusively recreational and social and would therefore not qualify as charitable within the meaning of the IRS guidelines for a 501 ( c ) (3) organization.
5. The creation of a preservation organization would not in any way affect the TLA and its purposes.
6. The preservation organization and the TLA may adopt policies to promote a positive constructive relationship between the entities.
7. The preservation organization cannot be owned or controlled by the TLA, as this would disqualify the organization as a properly constituted 501 (c ) (3) entity.
8. There was constructive discussion about including valuable and considered information about the lake from current and past leadership of the TLA. It was therefore suggested that seats on the preservation organization be designated in its bylaws to include the President of the TLA and other residents or property owners who have a unique interest in preserving the lake.
9. Other possible suggestions included designating Board of Directors positions for residents of the Town of DeRuyter and perhaps one resident from either the Town of Fabius or the Town of Cazenovia. In any event, those designated individuals could or could not be property owners on the lake. The preservation organization cannot restrict membership as this would inhibit the ability to be a public charity under IRS Section 501 ( c ) (3).
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Based on these the legal opinions and observations, the recommended solution is to establish a separate tax-exempt organization. If created, the new organization, tentatively called the Tioughnioga Lake Preservation Association, will fund projects that deal with environmental and conservation concerns identified by the Environmental Committee of the TLA or others that may develop. Those activities of the TLA that fall within the scope of concern and within the purposes of a 501 c 3 environmental corporation can become fundable projects of a new Tioughnioga Lake Preservation Association.