Thanks for the responses on this one everyone (I'm not the original poster) I have found it very informative so far, as we (Keene Bike Co-op) are just starting out and are exploring this route.
Please keep those responses coming, it's helping me sort out options for our project!
Dave Keene Bike-Co-op Keene, NH
On Mon, Aug 15, 2011 at 2:18 PM, Ryan Sharpe sharpe@sacbikekitchen.orgwrote:
I am not a non-profit lawyer; you should consult one. That said...
Sacramento Bicycle Kitchen applied for our 501(c)3 right after signing a lease for our first location. We don'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't like seeing nonprofits deriving the bulk of their revenues from sales.
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've occasionally thought of doing something similar in our shop, but we've found it'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're a customer and they'd better sign up for our appropriate programs. Period.
--Sharpe
On Mon, Aug 15, 2011 at 11:00 AM, Mary Bergeron mary@recycleabike.orgwrote:
Hi friends,
I'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:
- Do any 501c3 shops also have a volunteer point system? At RAB, we award
volunteers "points" for putting in time, and they can later cash these points in for used parts or time in the shop. We don't want to get rid of this system, but the IRS finds this problematic for 501c3.
- 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.
Thanks for any insight! Sorry if a similar email was already sent out by another RAB person...we're all trying to collect as much info as we can.
cheers,
Mary
Mary Bergeron Funds/Outreach Coordinator c: 508.265.2904 p: 508.273.7101 www.recycleabike.org
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