Background:

On April 4, 1990, the Bicycle Club of Irvine (“BCI”) was incorporated in California as a nonprofit public benefit corporation organized under the Nonprofit Public Benefit Corporation Law for charitable purposes. Beginning in 2011 BCI fell out of compliance with the required annual reports to the California Attorney General’s Registry of Charitable Trusts.
Those filings are intended to protect the public from the misuse of tax-deductible donations to charities.

BCI while organized as a charity, has never operated as charity. It is self-funded by its dues paying members supplemented by a modest amount of sponsorship dollars for which the sponsors receive some promotional benefit. BCI’s other activities are also self-funded through ticket sales calculated on a break-even basis, but sometimes subsidized by BCI’s savings. BCI has not solicited or received tax deductible donations.

In July 2020, BCI’s tax exempt status with the State of California was revoked, because BCI had failed to file required tax returns. When BCI re-applied to renew its tax-exempt status the California Attorney General’s Registry of Charitable Trusts reported to the California Franchise Tax Board that BCI was not in compliance with its charity reporting requirements.
Approval from the California Attorney General’s Registry of Charitable Trusts is a prerequisite for renewal of BCI’s tax-exempt status.

Beginning in June 2023, BCI’s current Treasurer has had numerous discussions and written exchanges with representatives of the Franchise Tax Board, California Attorney General’s Registry of Charitable Trusts and the Secretary of State’s offices explaining that while BCI is not presently in compliance it also has never operated as a charity.
As a result of the discussions, the above-mentioned agencies appear amenable to allowing BCI to amend its Articles of Incorporation to correct its status from a social welfare corporation with its tax-exempt status under Internal Revenue Service (IRS) Code 501(c)(3) and California Revenue and Tax Code (R&TC) section 23701f to that of a mutual benefit social and recreation club under IRS Code 501(c)(7) and R&TC section 23701g.
This resolution proposed that the Board choose to amend BCI’s Articles of Incorporation to officially become the mutual benefit social and recreation club that it has always been, and to then if approved reapply for tax exemptions under its revised status.

At our October 5th Board Meeting the Directors approved a resolution to amend BCI’s Articles of Incorporation to reflect its operation as a mutual benefit social and recreation club under IRS 501(c)(7) and California Revenue & Tax Code section 23701g. BCI was originally organized inaccurately as a public benefit corporation or charity. As a charity it has been subject to additional regulatory oversight even though BCI is self-funded by membership dues and does not solicit donations. We now seek to correct this error.

RESOLVED:

First, The Board of Directors of the Bicycle Club of Irvine is authorized to take the necessary action to seek to amend its Articles of Incorporation to correct its status from a social welfare corporation with its tax-exempt status under Internal Revenue Service (IRS) Code 501(c)(3) and California Revenue and Tax Code (R&TC) section 23701f to that of a mutual benefit social and recreation club under IRS Code 501(c)(7) and R&TC section 23701g; and to then re-apply for tax exemption under its revised status; and

Second, if the first resolution is approved, the Board of Directors of the Bicycle Club of Irvine will present the proposed amendment to its members for a vote for its approval at its Annual Meeting currently scheduled for October 14, 2023 or as soon thereafter as practicable.

The results of the vote taken at the Board of Directors Meeting on October 5, 2023:
Ayes 10 Nays 0 Abstain 0 (1 absent)