We at B!KE have been grappling with the question of how to structure
payment for our drop-in shop hours. This is our main program and
therefore our most consistent income generator.
Currently we have a $20 annual membership fee, which is great because
it's (reasonably) accessible for most, but less great because it's
rather inadequate as far as covering our expenses (we have about 100+
new & renewed memberships each year- not going to cover the bills),
and is probably too little to ask for from those who use the shop
frequently or those in higher income brackets.
We've discussed two-tiered membership fees (regular and un/
underemployed) or workstand rental time. It's really important to us
that the use of the space is not out of reach to anyone, but we're
also reluctant to have an overt volunteer-as-payment system because we
don't yet have the infrastructure for that, and frankly, we do need
the cash.
I was checking the google docs spreadsheet to see if it listed
different organizations solutions to this, but I don't think this is
up there yet. Anyone have any thoughts or suggestions?
Sarah Follett Director, B!KE: The Peterborough Community Bike Shop 400 Wolfe St Peterborough, Ontario (705) 748-6681 http://www.communitybikeshop.org
We went from the model you described to a model of asking for an hourly donation of $5 an hour for shop time with a cap of $35 a year. The idea being not everyone who uses the shop is a return customer, but those who use it a lot won't have to pay more than the annual membership fee. it's still a sliding scale "pay what you can" sort of donation policy. Those who can't afford it aren't turned away, and those who think it's cheap are encouraged to pay more. The idea is to minimize administration involved in tracking annual memberships. It's a less formal policy, but in general that fits our org's style. So far we've not been very proactive about collecting the donations. We basically just tell the people the policy, and let them put what they like in the donation till. It's a new policy for us this year, and as such somewhat experimental.
Matt Brittenham Freeride Montpelier http://www.freeridemontpelier.org
On Jun 7, 2010, at 9:43 AM, Sarah Follett (B!KE) wrote:
We at B!KE have been grappling with the question of how to structure payment for our drop-in shop hours. This is our main program and therefore our most consistent income generator. Currently we have a $20 annual membership fee, which is great because it's (reasonably) accessible for most, but less great because it's rather inadequate as far as covering our expenses (we have about 100+ new & renewed memberships each year- not going to cover the bills), and is probably too little to ask for from those who use the shop frequently or those in higher income brackets.
We've discussed two-tiered membership fees (regular and un/underemployed) or workstand rental time. It's really important to us that the use of the space is not out of reach to anyone, but we're also reluctant to have an overt volunteer-as-payment system because we don't yet have the infrastructure for that, and frankly, we do need the cash.
I was checking the google docs spreadsheet to see if it listed different organizations solutions to this, but I don't think this is up there yet. Anyone have any thoughts or suggestions?
Sarah Follett Director, B!KE: The Peterborough Community Bike Shop 400 Wolfe St Peterborough, Ontario (705) 748-6681 http://www.communitybikeshop.org
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
At the Durham Bike Co-op:
Day Fee $7 or 1 hr volunteering or Annual membership $35 or 5 hours volunteering.
Best, -Dave
On Mon, Jun 7, 2010 at 10:48 AM, Matt Brittenham mattface@gmail.com wrote:
We went from the model you described to a model of asking for an hourly donation of $5 an hour for shop time with a cap of $35 a year. The idea being not everyone who uses the shop is a return customer, but those who use it a lot won't have to pay more than the annual membership fee. it's still a sliding scale "pay what you can" sort of donation policy. Those who can't afford it aren't turned away, and those who think it's cheap are encouraged to pay more. The idea is to minimize administration involved in tracking annual memberships. It's a less formal policy, but in general that fits our org's style. So far we've not been very proactive about collecting the donations. We basically just tell the people the policy, and let them put what they like in the donation till. It's a new policy for us this year, and as such somewhat experimental. Matt Brittenham Freeride Montpelier http://www.freeridemontpelier.org
On Jun 7, 2010, at 9:43 AM, Sarah Follett (B!KE) wrote:
We at B!KE have been grappling with the question of how to structure payment for our drop-in shop hours. This is our main program and therefore our most consistent income generator. Currently we have a $20 annual membership fee, which is great because it's (reasonably) accessible for most, but less great because it's rather inadequate as far as covering our expenses (we have about 100+ new & renewed memberships each year- not going to cover the bills), and is probably too little to ask for from those who use the shop frequently or those in higher income brackets. We've discussed two-tiered membership fees (regular and un/underemployed) or workstand rental time. It's really important to us that the use of the space is not out of reach to anyone, but we're also reluctant to have an overt volunteer-as-payment system because we don't yet have the infrastructure for that, and frankly, we do need the cash. I was checking the google docs spreadsheet to see if it listed different organizations solutions to this, but I don't think this is up there yet. Anyone have any thoughts or suggestions? Sarah Follett Director, B!KE: The Peterborough Community Bike Shop 400 Wolfe St Peterborough, Ontario (705) 748-6681 http://www.communitybikeshop.org
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
At SLO Bike Kitchen in San Luis Obispo, CA, we also use the $5/day. To address people who may not be able to afford it, we leave it at the discretion of the day's staff to determine case by case fees. It makes it subjective and open to criticism if someone were to be given a reduced rate, followed by charging someone the full fee.
In practice though, I don't think we've had any issues. Generally everybody finds $5 totally reasonable and are understanding of our need to pay rent vs adjust to people with less $$. So I'd say it has been successful to leave it to whatever we can work out for things on a case by case basis. We're lucky to have low rent combined with good utilization of our shop, so losing $5 here and there doesn't matter much.
We run a orientation session for incoming volunteers and explicitly tell them that it's better to make the "customers" happy than make a profit. As we are a non-profit community service, it really doesn't have a good feel to refuse service to someone just because of $5. Volunteers are also told that if there is a safety issue with the bike, they should address it regardless of $$. A common case of this is a financially challenged person with zero or one working brake.
Brian SLO Bike Kitchen www.slobikekitchen.org
P.S. We don't have a monthy/yearly rate. It was interesting to hear of the $35/yr maximum idea. Does mean that you have to keep track of a customer database...
On Mon, Jun 7, 2010 at 06:43, Sarah Follett (B!KE) questions@communitybikeshop.org wrote:
We at B!KE have been grappling with the question of how to structure payment for our drop-in shop hours. This is our main program and therefore our most consistent income generator. Currently we have a $20 annual membership fee, which is great because it's (reasonably) accessible for most, but less great because it's rather inadequate as far as covering our expenses (we have about 100+ new & renewed memberships each year- not going to cover the bills), and is probably too little to ask for from those who use the shop frequently or those in higher income brackets. We've discussed two-tiered membership fees (regular and un/underemployed) or workstand rental time. It's really important to us that the use of the space is not out of reach to anyone, but we're also reluctant to have an overt volunteer-as-payment system because we don't yet have the infrastructure for that, and frankly, we do need the cash. I was checking the google docs spreadsheet to see if it listed different organizations solutions to this, but I don't think this is up there yet. Anyone have any thoughts or suggestions? Sarah Follett Director, B!KE: The Peterborough Community Bike Shop 400 Wolfe St Peterborough, Ontario (705) 748-6681 http://www.communitybikeshop.org
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
In our case it's entirely on the honor system, so we leave it up to customers/members to decide what they pay to use the shop, and therefore to keep track of what they should be paying. Partly we do it like this so as to remove any financial barrier to using our shop for those who can't afford it, but it also is intended to relieve us of the responsibility of tracking what's owed in terms of dues/shop fees. Of course we still need to keep track of sales of bikes and parts, but previously we were trying to maintain a membership folder, and that just got unwieldy. the theory was we can make as much or more from this donation model as we previously did with our annual memberships, but without the headache, or perceived barriers of requiring membership to use the shop.
On Jun 7, 2010, at 12:24 PM, Brian wrote:
P.S. We don't have a monthy/yearly rate. It was interesting to hear of the $35/yr maximum idea. Does mean that you have to keep track of a customer database...
Hello Sarah, We scrapped out membership model about 7 years ago and went to a simple DIY fee of $5/hr (which includes a stand, tools, grease, oil and some advice from the head mechanic). Most people gladly pay the fee and often insist on over paying. We also allow volunteers to accumlate volunteer hours and exchange them for DIY hours (but not parts or bikes). If you would like more details just send us and email or drop by if you ever make it up to the "big city" :-) If you come by during Cycle Salvation hours just ask to talk to Paul or Matt as they volunteer with re-cycles in addition to working at Cycle Salvation.
Chris Wells (Email Handler & one of many Volunteer Head Mechanics)
re-Cycles Bicycle Co-op 473 Bronson Ave. Ottawa
Re-Cycles Summer Hours: noon-5pm Monday*, 6pm-10pm Tuesday, Wednesday & Thursday 1pm-5pm Saturdays* *Any DIY's on Mondays or Saturdays must be self sufficient
Bike sales and donation drop off also available during Cycle Salvation hours: 9am-5:30pm Tuesday to Friday and 9am-1pm Saturday (BUT NO Volunteering or DIY)
info@re-cycles.ca http://www.re-cycles.ca/
--- On Mon, 6/7/10, Sarah Follett (B!KE) questions@communitybikeshop.org wrote:
From: Sarah Follett (B!KE) questions@communitybikeshop.org Subject: [TheThinkTank] user fees/membership To: "The Think Tank" Thethinktank@bikecollectives.org Date: Monday, June 7, 2010, 9:43 AM
We at B!KE have been grappling with the question of how to structure payment for our drop-in shop hours. This is our main program and therefore our most consistent income generator. Currently we have a $20 annual membership fee, which is great because it's (reasonably) accessible for most, but less great because it's rather inadequate as far as covering our expenses (we have about 100+ new & renewed memberships each year- not going to cover the bills), and is probably too little to ask for from those who use the shop frequently or those in higher income brackets.
We've discussed two-tiered membership fees (regular and un/underemployed) or workstand rental time. It's really important to us that the use of the space is not out of reach to anyone, but we're also reluctant to have an overt volunteer-as-payment system because we don't yet have the infrastructure for that, and frankly, we do need the cash.
I was checking the google docs spreadsheet to see if it listed different organizations solutions to this, but I don't think this is up there yet. Anyone have any thoughts or suggestions?
Sarah Follett Director, B!KE: The Peterborough Community Bike Shop 400 Wolfe St Peterborough, Ontario (705) 748-6681 http://www.communitybikeshop.org
-----Inline Attachment Follows-----
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Has anyone ever checked out the IRS regs on work trade or shop credit for volunteer time. We are working on a new bike co-op in town, and this question came up. They thought it was bartering and subject to taxes. Any help?
Andy - Akron,OH
Andy,
Did you ever find anything out about this?
Angel Davis, CA
On Wed, Jun 9, 2010 at 12:32 PM, Davis, Andrew ADavis@akronohio.gov wrote:
Has anyone ever checked out the IRS regs on work trade or shop credit for volunteer time. We are working on a new bike co-op in town, and this question came up. They thought it was bartering and subject to taxes. Any help?
Andy – Akron,OH
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Not much reply. Still interested if anyone has thoughts on this topic.
Andy - Akron, OH ________________________________ From: thethinktank-bounces@bikecollectives.org [mailto:thethinktank-bounces@bikecollectives.org] On Behalf Of Angel York Sent: Friday, July 16, 2010 4:00 AM To: The Think Tank Subject: Re: [TheThinkTank] Work Trade / shop credit/ taxes?
Andy,
Did you ever find anything out about this?
Angel Davis, CA On Wed, Jun 9, 2010 at 12:32 PM, Davis, Andrew <ADavis@akronohio.govmailto:ADavis@akronohio.gov> wrote: Has anyone ever checked out the IRS regs on work trade or shop credit for volunteer time. We are working on a new bike co-op in town, and this question came up. They thought it was bartering and subject to taxes. Any help?
Andy - Akron,OH
Thethinktank mailing list Thethinktank@bikecollectives.orgmailto:Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.orgmailto:TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Jim Sheenan is right, if you have a question you should contact the authority. The IRS tax exempt line (IRS.gov/EO) -- you can even make it anonymous.
This is only for the US, but... Cash and/or parts and/or bikes and/or services is irrelevant. If you focus on any of those, you are missing the whole point -- which is VALUE.
If the VALUE of what someone received from your organization exceeds $600, then that person is a contractor which means they give you a W-9 (http://www.irs.gov/pub/irs-pdf/fw9.pdf) at the beginning of the tax year and you give them a 1099-MISC (http://www.irs.gov/pub/irs-pdf/f1099msc.pdf) at the end of the tax year. If the VALUE is under $600 then you are NOT required to make that tax declaration. Just like you aren't required to give a donation receipt if the value is under $300 (but it is still a good idea for recognition and the fact that the donor should declare the value -- not the non-profit.)
Remember, in the eyes of the IRS people who donate get virtually NOTHING in return. Otherwise it would be called a transaction instead of a donation.
Another mental stumbling block I have after attending an IRS workshops for non-profits was: the difference between an employee and a contractor. The IRS answer was, "a contractor brings their own tools, while an employee relies on the employer to provide tools." and consequently "contractors pay ALL of their own taxes, whereas employers are required to withhold a certain percentage of taxes for the employee." To use an example, if you hired an electrical "contractor" and they came to your house empty handed and expected YOU to have multimeters, dykes, crimpers, etc.,... you probably wouldn't think they were a contractor either. :)
So my question becomes -- if a "volunteer" comes in and works their butt off fixing our bikes with our tools under our roof, and we reward them in bikes/parts that exceed $600. By default did we just hire them as an employee? If that is the case, do we need to ask them for money so we can withhold it and use it to pay their taxes? Further more, if they don't have any money, what do we do, use our own? Realistically they can ask to withhold as little as possible and are probably going to get everything back except social security, but the employer still has to pay that amount to the IRS. So to that end are low income people that get over $600 VALUE from a non-profit entitled to a year end bonus brokered by the IRS? Or does this mean that the cap for helping those in need (who can't afford to withhold any money for taxes) is $600?
Or given that the Bureau of Labor Statistics (http://www.policevolunteers.org/resources/references/?fa=value_vol_time) declares that the value per volunteer hour in Utah for 2009 is $17.22 -- does that mean that I have to turn volunteers away after 34 hours annually just to avoid this whole mess?
While I would be curious what the IRS would say, someone else can call, my guess is that this is truly "incidental" and extremely time consuming to audit -- so like most unenforceable laws on the books, they would only use this to "pull you over for suspicion of something else."
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.org
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.
On Fri, Jul 16, 2010 at 6:00 AM, Davis, Andrew ADavis@akronohio.gov wrote:
Not much reply.
Still interested if anyone has thoughts on this topic.
Andy – Akron, OH
From: thethinktank-bounces@bikecollectives.org [mailto:thethinktank-bounces@bikecollectives.org] On Behalf Of Angel York Sent: Friday, July 16, 2010 4:00 AM To: The Think Tank Subject: Re: [TheThinkTank] Work Trade / shop credit/ taxes?
Andy,
Did you ever find anything out about this?
Angel
Davis, CA
On Wed, Jun 9, 2010 at 12:32 PM, Davis, Andrew ADavis@akronohio.gov wrote:
Has anyone ever checked out the IRS regs on work trade or shop credit for volunteer time. We are working on a new bike co-op in town, and this question came up. They thought it was bartering and subject to taxes. Any help?
Andy – Akron,OH
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Excellent analysis Jonathan. I just finished a Non-profit law graduate course taught by an attorney with 20+ years of experience in non-profit law and this is exactly the answer I got from a discussion with her. I think the big thing that she emphasized was when to give out a tax receipt. If someone is donating a bicycle, you can give out a receipt for the value of the donation (like you said, leaving it up to the person to ascribe value). If someone makes a donation of cash through "suggested donation", they only get a receipt for the cash donated above the VALUE of the material object being received, not the entire donation itself. Basically, the remainder. I would think one could draw the same parallel between work-trade and getting stuff in exchange. -Andrew
On Mon, Jul 19, 2010 at 11:06 AM, Jonathan Morrison < jonathan@slcbikecollective.org> wrote:
Jim Sheenan is right, if you have a question you should contact the authority. The IRS tax exempt line (IRS.gov/EO) -- you can even make it anonymous.
This is only for the US, but... Cash and/or parts and/or bikes and/or services is irrelevant. If you focus on any of those, you are missing the whole point -- which is VALUE.
If the VALUE of what someone received from your organization exceeds $600, then that person is a contractor which means they give you a W-9 (http://www.irs.gov/pub/irs-pdf/fw9.pdf) at the beginning of the tax year and you give them a 1099-MISC (http://www.irs.gov/pub/irs-pdf/f1099msc.pdf) at the end of the tax year. If the VALUE is under $600 then you are NOT required to make that tax declaration. Just like you aren't required to give a donation receipt if the value is under $300 (but it is still a good idea for recognition and the fact that the donor should declare the value -- not the non-profit.)
Remember, in the eyes of the IRS people who donate get virtually NOTHING in return. Otherwise it would be called a transaction instead of a donation.
Another mental stumbling block I have after attending an IRS workshops for non-profits was: the difference between an employee and a contractor. The IRS answer was, "a contractor brings their own tools, while an employee relies on the employer to provide tools." and consequently "contractors pay ALL of their own taxes, whereas employers are required to withhold a certain percentage of taxes for the employee." To use an example, if you hired an electrical "contractor" and they came to your house empty handed and expected YOU to have multimeters, dykes, crimpers, etc.,... you probably wouldn't think they were a contractor either. :)
So my question becomes -- if a "volunteer" comes in and works their butt off fixing our bikes with our tools under our roof, and we reward them in bikes/parts that exceed $600. By default did we just hire them as an employee? If that is the case, do we need to ask them for money so we can withhold it and use it to pay their taxes? Further more, if they don't have any money, what do we do, use our own? Realistically they can ask to withhold as little as possible and are probably going to get everything back except social security, but the employer still has to pay that amount to the IRS. So to that end are low income people that get over $600 VALUE from a non-profit entitled to a year end bonus brokered by the IRS? Or does this mean that the cap for helping those in need (who can't afford to withhold any money for taxes) is $600?
Or given that the Bureau of Labor Statistics (http://www.policevolunteers.org/resources/references/?fa=value_vol_time) declares that the value per volunteer hour in Utah for 2009 is $17.22 -- does that mean that I have to turn volunteers away after 34 hours annually just to avoid this whole mess?
While I would be curious what the IRS would say, someone else can call, my guess is that this is truly "incidental" and extremely time consuming to audit -- so like most unenforceable laws on the books, they would only use this to "pull you over for suspicion of something else."
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.org
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.
On Fri, Jul 16, 2010 at 6:00 AM, Davis, Andrew ADavis@akronohio.gov wrote:
Not much reply.
Still interested if anyone has thoughts on this topic.
Andy – Akron, OH
From: thethinktank-bounces@bikecollectives.org [mailto:thethinktank-bounces@bikecollectives.org] On Behalf Of Angel
York
Sent: Friday, July 16, 2010 4:00 AM To: The Think Tank Subject: Re: [TheThinkTank] Work Trade / shop credit/ taxes?
Andy,
Did you ever find anything out about this?
Angel
Davis, CA
On Wed, Jun 9, 2010 at 12:32 PM, Davis, Andrew ADavis@akronohio.gov
wrote:
Has anyone ever checked out the IRS regs on work trade or shop credit for volunteer time. We are working on a new bike co-op in town, and this question came up. They thought it was bartering and subject to taxes. Any help?
Andy – Akron,OH
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to
TheThinkTank-leave@bikecollectives.org
To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to
TheThinkTank-leave@bikecollectives.org
To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
I think the legal buzz word for that is "quid pro quo"
http://en.wikipedia.org/wiki/Quid_pro_quo
This applies the most when it comes to membership I think. If you charge $100 for membership, they get a $10 tshirt and a $5 coupon somewhere -- if they get a tax write off it should be for $85 -- not $100.
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.org
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.
On Mon, Jul 19, 2010 at 12:01 PM, andrew bushaw andrew@fmbikeworkshop.org wrote:
Excellent analysis Jonathan. I just finished a Non-profit law graduate course taught by an attorney with 20+ years of experience in non-profit law and this is exactly the answer I got from a discussion with her. I think the big thing that she emphasized was when to give out a tax receipt. If someone is donating a bicycle, you can give out a receipt for the value of the donation (like you said, leaving it up to the person to ascribe value). If someone makes a donation of cash through "suggested donation", they only get a receipt for the cash donated above the VALUE of the material object being received, not the entire donation itself. Basically, the remainder. I would think one could draw the same parallel between work-trade and getting stuff in exchange. -Andrew
On Mon, Jul 19, 2010 at 11:06 AM, Jonathan Morrison jonathan@slcbikecollective.org wrote:
Jim Sheenan is right, if you have a question you should contact the authority. The IRS tax exempt line (IRS.gov/EO) -- you can even make it anonymous.
This is only for the US, but... Cash and/or parts and/or bikes and/or services is irrelevant. If you focus on any of those, you are missing the whole point -- which is VALUE.
If the VALUE of what someone received from your organization exceeds $600, then that person is a contractor which means they give you a W-9 (http://www.irs.gov/pub/irs-pdf/fw9.pdf) at the beginning of the tax year and you give them a 1099-MISC (http://www.irs.gov/pub/irs-pdf/f1099msc.pdf) at the end of the tax year. If the VALUE is under $600 then you are NOT required to make that tax declaration. Just like you aren't required to give a donation receipt if the value is under $300 (but it is still a good idea for recognition and the fact that the donor should declare the value -- not the non-profit.)
Remember, in the eyes of the IRS people who donate get virtually NOTHING in return. Otherwise it would be called a transaction instead of a donation.
Another mental stumbling block I have after attending an IRS workshops for non-profits was: the difference between an employee and a contractor. The IRS answer was, "a contractor brings their own tools, while an employee relies on the employer to provide tools." and consequently "contractors pay ALL of their own taxes, whereas employers are required to withhold a certain percentage of taxes for the employee." To use an example, if you hired an electrical "contractor" and they came to your house empty handed and expected YOU to have multimeters, dykes, crimpers, etc.,... you probably wouldn't think they were a contractor either. :)
So my question becomes -- if a "volunteer" comes in and works their butt off fixing our bikes with our tools under our roof, and we reward them in bikes/parts that exceed $600. By default did we just hire them as an employee? If that is the case, do we need to ask them for money so we can withhold it and use it to pay their taxes? Further more, if they don't have any money, what do we do, use our own? Realistically they can ask to withhold as little as possible and are probably going to get everything back except social security, but the employer still has to pay that amount to the IRS. So to that end are low income people that get over $600 VALUE from a non-profit entitled to a year end bonus brokered by the IRS? Or does this mean that the cap for helping those in need (who can't afford to withhold any money for taxes) is $600?
Or given that the Bureau of Labor Statistics (http://www.policevolunteers.org/resources/references/?fa=value_vol_time) declares that the value per volunteer hour in Utah for 2009 is $17.22 -- does that mean that I have to turn volunteers away after 34 hours annually just to avoid this whole mess?
While I would be curious what the IRS would say, someone else can call, my guess is that this is truly "incidental" and extremely time consuming to audit -- so like most unenforceable laws on the books, they would only use this to "pull you over for suspicion of something else."
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.org
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.
On Fri, Jul 16, 2010 at 6:00 AM, Davis, Andrew ADavis@akronohio.gov wrote:
Not much reply.
Still interested if anyone has thoughts on this topic.
Andy – Akron, OH
From: thethinktank-bounces@bikecollectives.org [mailto:thethinktank-bounces@bikecollectives.org] On Behalf Of Angel York Sent: Friday, July 16, 2010 4:00 AM To: The Think Tank Subject: Re: [TheThinkTank] Work Trade / shop credit/ taxes?
Andy,
Did you ever find anything out about this?
Angel
Davis, CA
On Wed, Jun 9, 2010 at 12:32 PM, Davis, Andrew ADavis@akronohio.gov wrote:
Has anyone ever checked out the IRS regs on work trade or shop credit for volunteer time. We are working on a new bike co-op in town, and this question came up. They thought it was bartering and subject to taxes. Any help?
Andy – Akron,OH
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit: http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
List, and OCBC trustees:
This issue of volunteer shop credit and tax implications has come up periodically for us. I remember reading tons of IRS publications during our request for determination, and recall that the question was answered satisfactorily -- perhaps in a phone call with the IRS agent assigned to our determination, because I could not find it in a quick search of relevant pubs. on IRS.gov/EO.
So I called the IRS. The Agent I spoke with, #0196396 also could not point me to anything specifically addressing this situation, but agreed with me that, as I described OCBC's policy to him, the credit we give volunteers is insubstantial, so not an issue of concern:
It could jepordize our exempt status if the credit given is more than "insubstantial", as in pub. 4221pc:
"*Private Benefit and Inurement * A public charity is prohibited from allowing more than an insubstantial accrual of private benefit to individuals or organizations.This restriction is to ensure that a tax-exempt organization serves a public interest, not a private one. If a private ben- efit is more than incidental, it could jeopardize the organization’s tax-exempt status. "
The other issue is whether credits could be construed as income, and therefore taxable for the volunteer, and require reporting by us.
The instructions for form 1099 intro seems to say that we'd have to report shop credit:
"File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year: ... • At least $600 in rents, *services (including parts and materials),*(my emphasis)* *prizes and awards, other income payments , medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;"
However, later in the doc it seems to explain this as paying (cash) *for*goods and/or services:
"Examples. The following are some examples of payments to be reported in box 7. ... • Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service."
The agent agreed that was the case, so not applicable, as we are not paying cash, and the amount of credit ($5/hour) is insubstantial.
However, to avoid even the appearance of impropriety, OCBC is still considering creating a shop credit donation policy whereby those vols with lots of credits can transfer them to a pool for use by others who can't volunteer for whatever reason (disability, hardship, etc.), or some mechanism to otherwise account for the "redonation" of credits. Other options would be to "zero-out" credits periodically or at some threshold, like $600.
This is not an issue for the majority of credits used, by (mostly poor) folks who just use credit to get a bike: this is part of our exempt purpose activity, and explained on our 1023 application. The issue is for vols who have amassed lots of credit they could potentially use to acquire a significant amount of (donated) stuff (OCBC shop credits can't be used for anything we purchase).
I cc the OCBC trustees for our treasurer to chime in, and as this discussion may be of interest at our upcoming annual meeting.
Jim Sheehan Director, Ohio City Bicycle Co-op 1823 Columbus Rd Cleveland, Ohio 44113 216 830 2667 OhioCityCycles.org
On Wed, Jun 9, 2010 at 3:32 PM, Davis, Andrew ADavis@akronohio.gov wrote:
Has anyone ever checked out the IRS regs on work trade or shop credit for volunteer time. We are working on a new bike co-op in town, and this question came up. They thought it was bartering and subject to taxes. Any help?
Andy – Akron,OH
Thethinktank mailing list Thethinktank@bikecollectives.org To unsubscribe, send a blank email to TheThinkTank-leave@bikecollectives.org To manage your subscription, plase visit:
http://lists.bikecollectives.org/listinfo.cgi/thethinktank-bikecollectives.o...
participants (10)
-
andrew bushaw -
Angel York -
Brian -
David J. Zielinski -
Davis, Andrew -
info＠re-cycles.ca -
Jim Sheehan -
Jonathan Morrison -
Matt Brittenham -
Sarah Follett (B!KE)