GarifunaWorld Blog: Garifuna Non Profit Organizations in New York

By Jose Francisco Avila

As part of the immigration process, the Garífunas have tried to establish and adapt their traditional community organizations to the USA environment; these organizations represent an important socialization factor and social development. These organizations have a long history in the implementation of social development activities. Nevertheless, this experience has not been documented; therefore, it has not been utilized to increase their project design and fundraising capacity.

In 2006, New Horizon Investment Club conducted a survey on Garifuna Home Town Associations’ interest and ability to invest in economic development projects in their hometowns in the North Coast of Honduras.[1] The survey has made it possible to identify associations in New York City . Among the results that stand out is the fact that 85% of the participants are predominantly involved in charitable work, which led us to extend our research to the nonprofit sector and the Garifuna organizations involved in it.

The nonprofit sector is the collective name used to describe institutions and organizations in American society that are neither government nor business. Other names often used include the not-for-profit sector, the third sector, the independent sector, the philanthropic sector, the voluntary sector, or the social sector. Outside the United States , nonprofits are often called nongovernmental organizations (NGOs) or civil society organizations.

These other names emphasize the characteristics that distinguish nonprofits — voluntary sector to acknowledge the importance of volunteers and voluntary action, independent sector to distinguish nonprofits from business and government, and social sector to underscore how the activities of nonprofits enhance the social fabric of our country.[2]

Choosing a Legal Structure

One of the first decisions that has to be made in establishing a nonprofit organization, is whether to incorporate. There are four main types of nonprofit organizations that fit most purposes for assembling people and resources around a goal. They are:

Informal, unincorporated organization
Incorporated organization
Tax-exempt incorporated nonprofit organization
Tax-exempt, incorporated organization to which contributions are deductible.

Informal, unincorporated organization

Not all purposes are best served by becoming incorporated or applying for tax exemption. For example many charitable organizations never become officially registered nonprofits. They choose to operate informally because they do not want to be responsible for the reporting requirements of official entities for any other reasons.[3] Among the organizations that can be included in this category, are 22 Garifuna Home Town Associations (HTA), including one of the oldest Garifuna organizations in New York City .

While choosing not to incorporate seems like the easiest path – no papers to complete and minimal levels of accountability to anyone outside of the group – it is potentially the most dangerous to individual members. By incorporating, an organization becomes a separate legal entity that exists outside of the individuals running it. This protects the organization’s leadership from being held personally liable for the organization’s obligations. There are fewer government reporting requirements for unincorporated associations, but they will find it more difficult to be recognized as tax-exempt, and they cannot receive grants from most foundations and corporations.

Incorporated organizations

When deciding whether or not to incorporate, you should consider the work you would like to pursues and how best to enhance and contribute to the network of organizations that already exists in your community. Perhaps another group is engaged in activities similar to those your group seeks to address, and the best approach would be to work with that other organization rather than to incorporate a new one.

In New York State , a not-for-profit corporation is a corporation formed pursuant to the Not-for-Profit Corporation Law. Not-for-Profit Corporation Law Section 201 (Purposes) provides a list of general purposes for which a not-for-profit corporation may be formed. The Certificate of Incorporation of a not-for-profit corporation must set forth the specific purposes for which the corporation is being formed. The purpose or purposes must clearly and fully describe the activities of the corporation. The corporation must designate its "type". The purpose or purposes of the corporation dictate the not-for-profit corporation’s "type." [4] Most Garifuna nonprofits are Type B - A not-for-profit corporation formed for any one or more of the following non-business purposes: charitable, educational, religious, scientific, literary, and cultural. Examples this category incluye: Organización de Damas Limoneñas en New York, Inc., Organización Travesía Nueva Ola, Inc., Organización de Jóvenes de Funda, Inc. Organización Pro-Desarrollo de Aguan, Inc. The "certificate" or "articles" of incorporation--are filed with the New York Department of State.

Garifuna not-for-profit corporations in New York State

A search of the New York Department of State Corporation and Business Entity Database produced a total of 50 Garifuna not-for-profit corporations, eight (8) are Belizean, six (6) Guatemalan and thirty six (36) Honduran. The first Garífuna organization was registered under the name of The Carib American Association; Inc. on July 10, 1946, the Belize Honduran Association of New York, on January 1, 1956 and the Fenix Social Club was registered on August 31, 1959. The Honduras Football & Social Club, Inc. filed its articles of incorporation on June 11^th, 1965.

Over the following decades, many Garifuna associations, were formed and incorporated, the vast majority with a social purpose, four were incorporated in the 1970s and one in the 1980s. Twenty eight organizations were incorporated in the 1990s, among them, the first modern Garifuna organization, Garifuna Women Pro Education, Inc. (MUGAMA, Spanish acronym), this organization represents a new trend in Garifuna organizational activity by becoming the first to focus on a specific Garifuna issue, education. Twelve organizations have been incorporated from 2000 – 2006, including Jamalali Uagucha, Inc. which became the most prominent Garifuna nonprofit in New York City until it got in legal trouble.[5]

As nonprofit organizations play increasingly important roles in our society, it becomes even more critical for them to perform effectively. Grantmakers for Effective Organizations, an affinity group of the Council on Foundations, defines an effective nonprofit as one that has "the ability to fulfill its mission through a blend of sound management, strong governance, and a persistent rededication to achieving results."[6] Establishing a nonprofit organization requires a full understanding of the key characteristics that will be important to future funders. Among these characteristics are a vital mission and Tax Exempt Status.

Tax Exempt Status

Only incorporated organizations can apply for a tax exempt ruling from the Internal Revenue Service (IRS). Tax exempt organizations are exempt from federal income tax, and are able to receive tax deductible contributions from individuals and businesses. 501(c)(3) organizations must operate “exclusively for religious, charitable, scientific, or educational purposes” and serve the common good.[7]

While many Garifuna nonprofits have been incorporated, only four have received tax exempt status from the IRS under section 501(c)(3) of the Internal Revenue Code. MUGAMA became the first Garifuna organization to receive such a status in 1995, as well as the first Garifuna organization to receive a grant from a philanthropic organization in 1996. More recently, the Garifuna Coalitional USA, Inc. has received a grant from the New York Foundation.

Three of the Tax-Exempt Garifuna organizations are classified as charitable organizations and include MUGAMA, Inc. whose purposes are “(a) to preserve and advance the history and culture of the Garifuna people through cultural and educational activities; (b) To encourage and support the education of the Garifuna Community in academic pursuits, leadership, and personal growth,” Hondurans Against AIDS, Inc, whose purpose is “to provide counseling, referrals and support for individuals living with HIV and AIDS. The program also encourages prevention by encouraging testing and education about HIV and AIDS. ”and the Garifuna Coalition USA, Inc., whose purposes and objectives shall be to “Serve as a resource, a forum, and advocate for Garifuna issues and a united voice for the Garifuna community.” The Evangelical Garifuna Church, Inc., is classified as a religious organization.

Nor-for-Profit Regulations

As in business and government, things in the nonprofit sector sometimes go wrong. Nonprofits are not immune from damage that can be caused by unscrupulous and fraudulent solicitors, financial improprieties, and executives and board members who care more about their own financial welfare than the mission of the organization.

A small division of the IRS is charged with ensuring that nonprofits are complying with the requirements for eligibility for tax-exempt status. IRS auditors investigate the financial affairs of thousands of nonprofits each year. As a result, a handful has their tax-exempt status revoked; others pay fines and taxes. As a result of the legal troubles of its executive director, Jamalali Uagucha, Inc. is no longer listed on the Internal Revenue Service’s list of organizations eligible to receive tax-deductible charitable contributions Most Recent Data Update of December 31, 2007.[8]

Nonprofits are governed by a board of directors that is legally responsible for making sure the organization remains true to its mission, safeguards its assets, and operates in the public interest. The board is the first line of defense against fraud and abuse.[9]

As you begin the process of establishing your nonprofit organization, it is important to remember that your organization must be able to demonstrate the key characteristics of a successful nonprofit organization: a vital mission, clear lines of accountability, high-quality programs and services, and reliable and diverse revenue streams.

The decision to form an organization, incorporate it and apply for tax exemption should be made very carefully. The rules for tax exemption are very specific, and depending on the nature of your organization and how it will sustain itself, these rules can restrict the types of activities you may conduct, create or increase tax liability, or simply become difficult or time consuming to follow.

Be mindful about the requirements for tax emption and choose the organizational structure that best meets your goal.

[1] New Horizon Investment Club, Garifuna Home Town Associations Survey, 2006

[2] Boardsource.org

[3] Community Resource Exchange, From Vision to Reality – A guide to launching a successful nonprofit organizations, 2002