Kiwanis confusion in Carefree

By Linda Bentley | June 10, 2009

Once a local civic-minded, social service organization, Kiwanis is now focused on children, partnered with UNICEF
Kiwanis logoCAREFREE – According to Kiwanis Club of Carefree President David Bell, both the Kiwanis Club and Kiwanis Club of Carefree Benefit Foundation are duly registered with the IRS and file Form 990 Exempt Organization returns each year.

Sonoran News had already researched Publication 78, “Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, a list of organizations eligible to receive tax-deductible charitable contributions,” and came up empty.

So, Sonoran News made an inquiry directly to the IRS, asking about the two Kiwanis Club of Carefree organizations, using the names under which both organizations were incorporated. The IRS response indicated no such Kiwanis organizations existed.

We later learned what was filed and incorporated in Arizona was not how these organizations were registered with the IRS.

The Kiwanis Club of Carefree is registered simply as Kiwanis International with a Carefree P.O. Box, while Kiwanis Club of Carefree Benefits Foundation is registered as Southwest District Kiwanis with the same P.O. Box in Carefree.

The Kiwanis Club of Carefree is classified as an “association” and contributions are not tax deductible, whereas the Benefit Foundation is classified as a 501(c)(3) nonprofit corporation and “charitable organization,” to which donations are tax deductible.

However, when Kiwanis Club of Carefree incorporated in 1973, Article III of its articles of incorporation, stated, “The nature of the business to be transacted and in which this nonprofit corporation may be engaged is as follows:”
1) To give primacy to the human and spiritual rather than to the material values of life.
2) To encourage the daily living of the Golden Rule in all human relationships.
3) To promote the adoption and the application of higher social, business and professional standards.
4) To develop, by precept and example, a more intelligent, aggressive and serviceable citizenship.
5) To provide, through this club, a practical means to form enduring friendships, to render altruistic service and to build a better community.
6) To cooperate in creating and maintaining that sound public opinion and high idealism which make possible the increase of righteousness, justice, patriotism and goodwill.
7) For the purposes aforesaid, to take over the assets, rights and franchises of the unincorporated club, known as the Kiwanis Club of Carefree, Ariz., and its members.
8) To do all such things as are incidental or conducive to the attainment of the above objectives.

Article V states the commencement of the corporation shall be the date of the issuance of its certificate of incorporation by the Arizona Corporation Commission and will endure for the full term of 25 years with the privilege of renewal provided by statute thereafter.

Article IX states the power to adopt or amend bylaws is vested in the membership and any amendment of the bylaws may be adopted by a two-thirds vote of the active and senior members of the corporation present at any meeting of the club, provided members are given two-week’s written notice of the proposed amendment and it is in conformity of the constitution and bylaws of Kiwanis International.

Article X states, “All members of this corporation shall be members of Kiwanis International, a corporation organized and existing under the laws of the state of Illinois …”

And, Article XII states, “Whenever requested by the Board of Trustees of Kiwanis International, this corporation shall be dissolved, or change its form of organization as may from time to time be requested by Kiwanis International.”

It goes on to state no amendments to their articles of incorporation “shall be made without the consent of Kiwanis International.”

Kiwanis Club of Carefree’s incorporation became official on April 2, 1974.

An amendment to those articles was made in June 1976, “upon recommendation of Kiwanis International” to remove all references to the territorial limits of the club, which were stated as the Cave Creek Unified School District’s boundaries, and replace the article to read: “The principal place of business of this corporation shall be at Carefree, Maricopa County, Arizona, where meetings of directors may be held, and any and all business of the club transacted.”

The Kiwanis Club of Carefree, which, at one time, met regularly at the Carefree Inn, now meets weekly at Harold’s Cave Creek Corral in Cave Creek.

The general nature of the club’s business has certainly changed as evidenced by its website, which states: “We are a service organization in the Desert Foothills area that focuses on helping children develop their potential. We do this by offering scholarships, educational support, health care and hope. Our members represent a diverse group of businesspeople and professionals. We began our local club in 1973 with 22 members. Now we have almost 300 members.

“We are now the seventh largest club of Kiwanis International. Kiwanis International has more than 600,000 members in over 80 countries. It has a number of initiatives – medical, educational, disaster relief – serving children around the world. More than 90 percent of our funds are distributed locally in our community. Through Kiwanis International in partnership with UNICEF, we also support a worldwide initiative to reduce iodine deficiency disorders – the leading preventable cause of mental retardation.”

On Tuesday, an IRS representative informed Sonoran News the exempt status was terminated for the Kiwanis Club of Carefree Benefit Foundation in May 2009, but didn’t know why.

Ralph Pipp signed the 2007 Form 990 Return of Organization Exempt from Income Tax, the most recent one on file with the IRS. Since Pipp also stood up at a recent Carefree Council meeting to say Sonoran News didn’t know what it was talking about, he was called to find out if he knew about the termination. Pipp said he was no longer the treasurer or a director and said it would be better to call the current treasurer. When asked who the current treasurer was, Pipp responded, “Ask Mr. Sorchych, he has all the same information I have.”

A few minutes after hanging up with Pipp, the IRS representative called back and apologized for misreading the code and said the foundation’s exempt status was not terminated.