I am not a non-profit lawyer; you should consult one.  That said...<br><br>Sacramento Bicycle Kitchen applied for our 501(c)3 right after signing a lease for our first location.  We don&#39;t sell any new parts (except cables and housing) or new bikes, but we do sell all sorts of donated used goods, from barrel adjusters to whole bikes.  Be sure to track the donations and any applicable sales tax.  You might want to keep an eye on your sales/cash donation ratio, too.  From what I hear, the IRS doesn&#39;t like seeing nonprofits deriving the bulk of their revenues from sales.<br>
<br>It sounds like your points system is just a way to make an end-run around rules about compensation -- which is probably why the IRS is bristling -- and will only make income and payroll tax calculations a pain in the ass.  We&#39;ve occasionally thought of doing something similar in our shop, but we&#39;ve found it&#39;s just easier to be upfront and say that our volunteers are those people who work for us with no expectation of repayment.  If someone wants to buy a part in our shop with time instead of money, they&#39;re a customer and they&#39;d better sign up for our appropriate programs.  Period.<br>
<br>--Sharpe<br><br><br><br><div class="gmail_quote">On Mon, Aug 15, 2011 at 11:00 AM, Mary Bergeron <span dir="ltr">&lt;<a href="mailto:mary@recycleabike.org">mary@recycleabike.org</a>&gt;</span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex;">
<span style="font-family:arial, sans-serif;background-color:rgb(255, 255, 255)"><p><span style="color:rgb(31, 73, 125)">Hi friends, </span></p><p><font color="#1f497d">I&#39;m a volunteer at Recycle-A-Bike here in Providence, RI. We are in the middle of applying for 501c3 status and have hit a few road blocks. I was wondering if any folks have applied for 501c3 or are also in the middle of it, and can offer some advice. Basically, my questions are:</font></p>

<p><font color="#1f497d">- Do any 501c3 shops also have a volunteer point system? At RAB, we award volunteers &quot;points&quot; for putting in time, and they can later cash these points in for used parts or time in the shop. We don&#39;t want to get rid of this system, but the IRS finds this problematic for 501c3.</font></p>

<p><font color="#1f497d">- Do any shops sell bikes as a 501c3? Have shops set up both models- such as a for-profit bike shop to sell bikes and an affiliated non-profit to run community programs? So far bike sales keep us sustainable, so we really want to keep this up as a nonprofit. </font></p>

<p><font color="#1f497d">Thanks for any insight! Sorry if a similar email was already sent out by another RAB person...we&#39;re all trying to collect as much info as we can.</font></p><p><font color="#1f497d">cheers,</font></p>

<p><font color="#1f497d">Mary</font></p></span>-- <br><font color="#888888">Mary Bergeron<div>Funds/Outreach Coordinator</div><div>c: <a href="tel:508.265.2904" value="+15082652904" target="_blank">508.265.2904</a></div>
<div>p: <a href="tel:508.273.7101" value="+15082737101" target="_blank">508.273.7101</a></div><div><a href="http://www.recycleabike.org" target="_blank">www.recycleabike.org</a></div>
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<br></blockquote></div><br><br clear="all"><br>-- <br>Sacramento Bicycle Kitchen<br><a href="http://sacbikekitchen.org/">http://sacbikekitchen.org/</a><br>1915 I Street, Midtown Sacramento<br>Open Tu 6-9p, We 6-9p, Th 6-9p, Fr 10a-2p (kids 6-8p), Sa 12-4p<br>