response 25 of 78:

Dec 1 15:42 UTC 1997

Id like to pointout that grex going into the retail business doesnt
exactly fit into its non-profit status.  It could be argued that 
grex itself is one venture (non profit) and the store is a separate
retail venture (for profit)  I wonder if this is being done on too
large a scale.

response 27 of 78:

Dec 2 03:20 UTC 1997

I guess I'd like to solicit some other ideas about how much money we should
spend on advertising.  I'll go enter an item about it.

response 29 of 78:

Dec 2 05:28 UTC 1997

re 25:
        Even non-profits need money to operate, Richard.  The difference
between a for-profit and a non-profit is where the money goes.  In a
for-profit corporation, profits go to the owners (well, in theory anyway. 
I imagine most for-profits consist of the owners putting lots of money in and
not ending up getting very much back out).  In a  non-profit, the money has
to go to further the organization or its goals, rather than enriching the
people who control it.

response 31 of 78:

Dec 3 19:45 UTC 1997

#29 sounds like what Arbornet thought, when it was selling manuals and 
the like.

My wife (aandrea) used to be the business manager for NEW Center, and 
has some insight into financial matters for non-profits.  She told me 
about a time when NEW Center was selling manuals, and assuming it was 
covered as part of their mission.  It wasn't, it was "unrelated business 
income", and they had to pay sales and income taxes on it, as I 
understand what she said.

Someone responsible might want to ask her about that, or contact NEW 
Center and see if they can help answer the question, or as Aaron Larson.  

My understanding is that the TV56 store in Briarwood is also producing 
"unrelated business income", and that the money probably has to be 
accounted for in a different way than donations and advertising money.  
My understanding is very weak in these matters.  If Grex is trying to 
operate according to the rules of a 501(c)(3), though, the Grex Store is 
probably not covered under it's mission.

response 33 of 78:

Dec 3 22:11 UTC 1997

I'm hoping Rane jumps in here as his information is more up to date than
mine but I believe organizations like Grex are allowed to receive money,
even when folks are getting a product in return, so long as that profit
isn't more than 1/3 of the organization's gross income. 

I think our supplying and even selling t-shirts and related
logo-merchandise is a neat idea.  I'd like to see some safeguards set up
so that it can't get away from us yet be easy to manage, but I really like
the idea.  Rob and Jan have done a Good Thing in getting this going.  Mark
is working to see it gets accurately integrated into the budget
report.  And I sure hope that people throwing in suggestions from the
sidelines (myself especially) isn't being taken as as sign their efforts
aren't appreciated. 

response 35 of 78:

Dec 4 07:01 UTC 1997

You have to meet the IRS "support" tests. Mary alludes to the 1/3 rule,
but one has to know what to put in the numerator and what in the
denominator. The test, under 501(c)3, is in regard to "public support".
All income goes in the denominator, and essentially all donations go
into the numerator (but you can't count donations from single sources
that are more than 2% of the gross income). Dues count as public support.

I haven't been following this very closely, but have STATE SALES TAXES
been mentioned? You have to have a license to sell retail, and you must
collect sales taxes and submit them to the state. 

I am not immediately conversant on the rules for also paying federal
income taxes on sales - never had to deal with that.

response 37 of 78:

Dec 4 07:36 UTC 1997

There are rules on the value of premiums used in fund raisers before
the recipients have to deduct that value from the tax deduction they
can claim (this is for a 501(c)3). I don't think that such premiums
are subject to state sales tax, since you are not offering them for sale.
This would have to looked into further, though.

By the way - it is easy to get a state sales license. But then you have
to submit regular reports (and a form), even if you have no sales. If
you lapse, they let a big penalty build up, and then dump that on you.
So filing the sales tax report would become a regular necessary job
of the treasurer. It is not hard, but it cannot be forgotten. There
is certainly no *harm* in collecting and remitting sales tax. You can
build it into the price of the goods, even, and then figure out later
what you must send to the state.

response 41 of 78:

Dec 6 00:06 UTC 1997

I don't want to see the store hung up on bureaucratic trivia.  I
hope that the Board lets aruba set up the *simplest possible*
accounting system.
        Since Grex is currently *not* a 501(c)(3) organization, but
a simple Michigan non-profit, all that stuff about "unrelated income"
and the 1/3 rule don't apply.  But, just FWIW, nothing is "unrelated
income" (and hence taxable) which is produced by volunteers *alone*.
This is what I call the "bake sale rule."  Many if not most 501(c)(3)'s
have volunteer fund-raising projects which have nothing to do with
their mission.  The IRS doesn't tax these projects.
        With regard to Michigan sales tax, Dave Thaler told me that
goods sold by a Michigan non-profit (like Grex) are *not* subject to
sales tax unless more than $15,000 of goods are sold per year.
Maybe valerie will find such a provision in the sales tax paperwork
she is reading.  If not, a call to Lansing might be *very* helpful.
        No level of government is interested in going after small-
scale nonprofits.

response 43 of 78:

Dec 6 15:39 UTC 1997

#41...yes the 501(3)(c) rules dont apply because grexdoesnt have that
status, but grex's bylaws do state dont they that grex has to abide by
those rules anyway.

this came up in agora when I was asking about grex endorsing political
candidates and the answer I got was that grex couldnt because it was
bound by the bylaws to follow what would be the rules if it were a
501(3)(c) even though it is not.

It would be hypocritical to say that in one case grex has to follow
501(3)(c) rules (and therefore not endorse Larry Kestenbaum if he runs for
state rep) but in the other case of the grex store and the 1/3 requirement
it doesnt have to follow the rules.

response 45 of 78:

Dec 6 21:15 UTC 1997

According to Jan in resp:coop,13,1 the proviso in question is in our
Articles of Incorporation, article 6, section 3.  I don't know where to find
the Articles online, though.

response 47 of 78:

Dec 7 21:19 UTC 1997

When Grex does file for 501(c)3 status it will have to submit its
fiscal records for past years, to ensure that it has conformed in the
past to 501(c)3 regulations and does not owe past taxes, etc. It is not
adviseable to do anything now not in accord with 501(c)3 exemption if
such exemption will be sought. Of course, if past practices were not
in accord with 501(c)3, but past taxes are still not due, then there should
be no problem (but maybe some delays).

response 49 of 78:

Dec 8 16:58 UTC 1997

I sure wouldn't want to see Grex endorsing political candidates.  What 
would such an endorsement mean?  That the Board had decided to endorse 
someone, and therefore if I want to become a member and vote, I have to 
consider the politics of the candidates?  That all of us endorse the 
candidate?  How is that determined?  There are users here who are from 
countries that don't get to vote.  Do they endorse who "we" endorse?

resp:43 really set the bells to clanging for me.  Sorry about the drift.