Our very small senior club is sponsored by the local recreation council, but recently we have discussed separating to be a stand-alone club. They have told us that if we do we will not get our money back and will have to leave all of our supplies with them. The council deducts over $600 dollars a year for head tax from our account, which is the major reason we want to leave. Can they legally take our money and supplies, and keep the name of our club?
It sounds like they can. It sounds like you don’t exist as a legal entity and are merely an activity of the council. If you don’t exist, it isn’t really “your” money. It sounds like it is the council’s money, utilized for your activities.
It also sounds like it may not be financially worthwhile to spin off into a separate entity to save $600 a year. You could easily spend that if you have to pay to set up a new entity and comply with various state and local filing requirements every year, and perhaps get alternate facilities for your meetings.
You might be able to negotiate a reduction in the head tax from the council, but I would weigh carefully all the benefits you get from their hosting your activities and what it might cost to replicate them on a stand-alone basis. It may not be worth it.