This question came up in our 'Getting Incorporated -paperwork to get legit' and it almost seems like paranoia to me and the bici crew in santa barbara. We give volunteer discounts, but we still make a slight amount of profit in the transaction, just like any other shop would offer an employee discount. In a very real sense our volunteers are employees, they simply don't get paid. In the classic non-profit perspective they are donating their time, and I can understand how the idea of quid pro quo (you do something for me, I do something for you) seems to invalidate that. One way to guard against that is to not give away the volunteer discount to quickly or easily. Based on the accounting and legal advice that we have sought with professionals, this is not a significant concern, in other words:
Don't trip.
I feel like other concerns such as paying sales tax and having insurance to prevent an accident from taking down your kitchen and other important neccessities of being a legal entity are far more important concerns. If your collective is currently being reviewed and scrutinized for acceptance as your own 501(c)3 then perhaps board members shouldn't be recieving anything that could look like a kick-back. Even still I'm not convinced that discount pricing to someone involved in an industry, even the not for profit side of an industry, is at all a kick-back. If you volunteered in an orchard should you pay whole foods prices for peices of fruit?
Obviously to the general public new items you sell should be sold at fair retail value otherwise your organization would be using it's non-profit status to undercut local business. those who significantly contribute hours in an endevor, however, aren't members of the general public. They are part of a team that puts a lot of work into making their shop happen. A (in the scheme of things) minor discount as a perk for significant involvement certainly seems fair and, in our opinion, can be justified as legal.
If you live in California, however, any discount purchases should still include sales tax as they are still a taxable transaction, used or new.
-Ed
bici Centro
Santa Barbara
On Tue, Nov 18, 2008 at 1:51 PM, joshua muir
<muirjoshua@gmail.com> wrote:
I haven't heard any conflicts along such lines other than those with neighboring retailers. The result then is that it gets harder and harder for community projects to get QBP accounts.
As far as taxes are concerned, I am not sure of the specifics. As long as you are covering your costs and not spending money/losing money to support your volunteers' parts habit, I don't suspect there is a problem. It is the mission of most of our project to provide for the safe and affordable repair of bicycles and to encourage mechanical self-reliance etc etc and cheap parts are a big part of this.
josh
On Tue, Nov 18, 2008 at 1:29 PM, Jonathan Morrison
<jonathan@slcbikecollective.org> wrote:
Sadly, with a good lawyer you can do anything you want, sadly even illegal activities. Pretty sad isn't it? Sader still, if you don't have a good lawyer I would play it safe and not do anything that might _force_ you to get a good lawyer.
Smile!
To figure out what to do to play it safe, contact the agency you filed as a "Member owned Co-operative" with such as the California Secretary of State. If you are a 501(c)(3) non-profit than contact the IRS. Calls can be anonymous.
I would also ask established local "member owned cooperatives" what they do.
--
Sincerely,
Jonathan Morrison
Executive Director
Salt Lake City Bicycle Collective
2312 S. West Temple
Salt Lake City, UT 84115
w: 801-328-2453
c: 801-688-0183
f: 801-466-3856
www.slcbikecollective.orgGet Addicted to Crank!
http://www.slcbikecollective.org/crank/
The mission of the Salt Lake City Bicycle Collective is to promote cycling as an effective and sustainable form of transportation and as a cornerstone of a cleaner, healthier, and safer society. The Bicycle Collective provides refurbished bicycles and educational programs to the community, focusing on children and lower income households.
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Joshua Muir
joshua@santacruzhub.org
Frances Cycles -- francescycles.com
Handbuilt cycling framesets
Touring, Track, Road,Cross, and Cycletrucks for hauling any distance
The Bicycle Church Collective
Community Self-Service Cycle Repair
3pm to 7pm everyday except Sunday
703 Pacific Ave (enter on Spruce St)
Santa Cruz, CA 95060
(831) 425-2453
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Ed France
Bici Centro
601 E. Montecito St.
Santa Barbara, Ca 93103
310 936 0857
Bici Centro is a project of the Santa Barbara Bicycle Coalition