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| Author |
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| 25 new of 78 responses total. |
aruba
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response 18 of 78:
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Nov 30 13:19 UTC 1997 |
Well, OK, that's simpler than what I thought you meant. And if, as you
suggest, Mary, we call the store's balance the "promotional fund" and use it
to pay for any advertisements, it solves the problem of deciding how much
money to allocate for advertising, which is something we also needed to
address. I'm not sure that's a *good* solution, but I don't have a clue,
otherwise, how to decide how much to spend on advertising. So it's a
welcome idea.
So you're imagining that if the promptional fund contains $700, and the
storemaster wants to order $700 worth of shirts, he need only ask the
treasurer for a check, and the board doesn't have to approve the expense at
all? But if the storemaster wants to "borrow" money from the general
fund, then he needs to ask the board for approval?
I guess I have no objection to adding another category to the treasurer's
report, to subtract from it all purchases of stock and advertisements we
buy, and to add to it all sales from the store. Right now the total will
be significantly negative, since we have paid out more than we have taken
in. Perhaps the treasurer's report ought to include a summary of all
store stock as well?
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mary
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response 19 of 78:
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Nov 30 16:03 UTC 1997 |
You got it. ;-)
If the monthly treasurer's report documents the store's
income and expenses, broken down into stock purchased
and sold, mailing supplies, postage, and a clear
balance, then I don't see why a monthly inventory
would be needed.
When the Board wants to allocate
funds for a promotional activity they'd confer with
the Storemaster to see if such expenditures could
comfortably come from the Store "account". I expect
the answer would pretty much be clearly visible in
the numbers but in the event there were questions, again,
an inventory could be requested. When (if) the profits
ever got so big that the Store and promotional activities
were being adequately funded the Board could then decide
to move some money over into the general fund or put
it toward a special project.
But meanwhile the Store chugs along without a lot of
micro-management. I expect it will be some time before
the Store will be operating in the black, with the startup
costs repaid to the general fund. I'd also suspect the next
order or two will be a custom order for just what is needed
to increase profits and fine-tune the inventory.
And ya'll will be very happy to hear I'm going back to work
tomorrow and won't have nearly as much time to ramble on
and on and on... ;-)
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janc
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response 20 of 78:
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Dec 1 00:44 UTC 1997 |
Mark: When Rob dropped of the Mugs and mouse-pads, he said he thought he had
been reimbursed for this. This would have been quite a long time ago. Way
back when Rob originally got them made. I know I bought a mousepad and
Valerie bought a mug back then. I thought we paid Grex, so I hope Grex paid
Rob.
Hmmm... I think I'd handle this by making a rule:
_____
\
> (purchase price of item) < $900
/____
inventory
That is, we should never have more than some amount, say $900, invested in
inventory.
This rule means the storemaster does not have to ask the board for approval
every time a purchase is made. If the storemaster wanted the cap raised,
then board approval would be needed.
The cap should be relatively high, so that purchases can be made in large
lots (thus keeping costs down). We would expect the actual inventories to
average significantly lower than the cap.
For internal accounting, I'd probably ask the store keeper to report on
the total purchase value of Grex's inventory at the end of each month. On
Grex's account books, we'd record that value, the purchase price of the
inventory, as part of Grex's total worth. This way we won't see Grex's
finances take an apparant nose dive every time we buy a batch of T-shirts.
Instead, purchasing inventory will just show numbers moving from the cash
column to the inventory column. We will see Grex's bank account rise
whenever the shop sells anything, since the sales price is higher than
the inventory price.
This is a bit of a pain. Different shirt styles and colors have different
purchase prices. I don't know what they are, though I guess I can get them.
But I don't see any sensible way of avoiding that without making complete
nonsense out of our account books. I think it's pretty much a matter of
setting up a spreadsheet, recording purchase and sales price of each type
of item, and carefully updating the inventory counts of each item. Not
really too bad.
I don't like the idea of farming all the profits from the store back into
the store. I don't see why the store should necessarily grow significantly.
If there are reasons why it should get bigger, then the board should be asked
to grow its inventory cap.
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janc
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response 21 of 78:
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Dec 1 00:59 UTC 1997 |
Here's what I see involved in the shopkeeper/shopmaster job:
Keep the inventory in some reasonably safe place.
Accept orders and arrange for delivery of the items.
If people pay you instead of Mark, transfer money to Mark.
Keep records of current inventory, purchase prices, sales prices.
Report monthly on the state of things.
When inventories get low, coordinate new purchases.
Related work that may or may not be done by the same person:
Maintain grex shop web page.
Design new stuff.
Basically it's a job that requires a someone who is well organized, and has
pretty good personal skills for dealing with other volunteers, suppliers and
customers. Its probably moderately good resume fodder ("I managed the
merchandising branch of Cyberspace Communication Incorporated for two years
and brought in a 340% return on investment").
It could be divided over several people. So far, Rob has been doing most of
the design and purchasing of stuff (it makes a lot of sense for people doing
design to coordinate directly with the suppliers), while I've been doing
the sales (such as they are).
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aruba
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response 22 of 78:
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Dec 1 08:45 UTC 1997 |
I would add that the storemaster ought to keep track of requests ("backorders")
that get made but can;'t be fulfilled because the item requested is out of
stock. That, and records of what has sold well in the past, will provide a
sound basis for deciding what to stock up on next time a purchase is made.
If bruin is still interested in the job after reading Jan's definitions, I
think he'd do it well.
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bruin
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response 23 of 78:
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Dec 1 12:53 UTC 1997 |
The position looks somewhat less attractive to me right now, but I could
probably still volunteer as long as I am not doing all the work by myself.
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mary
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response 24 of 78:
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Dec 1 13:07 UTC 1997 |
If you are going to let the store manager place orders by
simply requesting the money from the general fund then I think
you need a few other safeguards other than a $900 max of stock
and money available. If the general fund is flush with $6000
of cash assets then $900 is reasonable. If the fund has just
had a big hit for hardware or donations are down and maybe
we only have $2000 available then $900 is way to high.
Maybe a dollar figure or a percentage of cash assets, whichever
is the *lower* figure.
I still would very much like to see store business kept quite
out of the general fund. But that's just me.
Too, whatever system ends up being used the treasurer's report will
clearly show, on a monthly basis, how much money went to the store and
what the bottom line cash assets are, right? I'd hate see folks
following an "assets" line, thinking that cash is available
to keep grex running in the event of an emergency only to find out
it's being held in t-shirts.
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richard
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response 25 of 78:
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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.
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scott
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response 26 of 78:
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Dec 1 17:15 UTC 1997 |
The local PBS tv station has a "Store of Knowledge" shop in the local
mall...I'd really be surprised if our operation was "too big". It's
fundraising, so all the profits really go to Grex, instead of shareholders.
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aruba
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response 27 of 78:
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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.
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aruba
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response 28 of 78:
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Dec 2 03:30 UTC 1997 |
OK, I've entered item 57 about advertising strategy.
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scg
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response 29 of 78:
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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.
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aruba
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response 30 of 78:
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Dec 2 06:40 UTC 1997 |
Re #20: I can't find any record that we paid Rob for the mousepads and mugs,
I'm afraid. :(
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jep
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response 31 of 78:
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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.
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richard
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response 32 of 78:
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Dec 3 20:03 UTC 1997 |
#29..exactly, I dont think it is covered....itis one thing
to operate via user donations, but operating via retailsales is
another thing, even if the money is going to the same place. Wouldnt
want grex to end up owing $$$ to the IRS because the rules wre
misunderstood. Im just saying maybe this wasnt thought through enough
before the go ahead was given to do it on this scale.
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mary
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response 33 of 78:
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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.
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janc
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response 34 of 78:
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Dec 4 00:42 UTC 1997 |
The Grex Store definately is "unrelated business income". I'd have to dig
up the rules on that again, but my memory was that we were in no immediate
danger of violating any of them.
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rcurl
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response 35 of 78:
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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.
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other
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response 36 of 78:
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Dec 4 07:19 UTC 1997 |
what if we call it "the Grex eternal fundraiser" and offer the items as
"premiums" (or "premia") for the "donations" we receive?
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rcurl
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response 37 of 78:
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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.
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aruba
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response 38 of 78:
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Dec 4 08:48 UTC 1997 |
Yes, we have a sales tax license, as of about 3 weeks ago, and yes we have
been collecting sales tax on items sold in the Grex store. Valerie, you will
give me the forms to submit and let me know how often to submit them, right?
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valerie
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response 39 of 78:
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Dec 4 17:08 UTC 1997 |
This response has been erased.
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valerie
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response 40 of 78:
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Dec 5 14:39 UTC 1997 |
This response has been erased.
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dpc
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response 41 of 78:
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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.
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valerie
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response 42 of 78:
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Dec 6 14:28 UTC 1997 |
This response has been erased.
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