In this down-turned economy, all business entities are looking to enhance or supplement their current revenue sources, and not-for-profit organizations (NPO’s) are no exception.  Because a number of charitable organizations are exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code, the revenue generated by these organizations must be in accordance with its stated mission in order to be tax-exempt. Go back and review the organization’s Form 1023 and the IRS determination letter and verify “why” your organization is exempt from taxation. 

So what if an opportunity presents itself to increase your bottom line that may not fit your mission? Does that mean as a NPO you can not take advantage of this opportunity?  Not necessarily.  The income can be earned, but depending on its source, it may be considered unrelated business income. If the revenue is unrelated, then net income in excess of $1,000 is subject to the excise tax.

What types of property or transactions are specifically exempt or subject to being taxed? Continue reading…

Read the rest of this entry »

Ask most parents, teachers, administrators and board members at a private school the following three questions:
Would you prefer high or low:

• tuition?
• student/teacher ratio?
• teacher pay?

You are most likely to hear a desire for low tuition, low student to teacher ratio and high teacher pay.  This sounds great and appeals to almost everyone…until the bankruptcy.

The trick is to find a balance among these key, interrelated factors. Read the rest of this entry »

On Wednesday, January 7th, RCO sponsored the Executive Exchange at the Funding Information Center. At the beginning of the presentation Colleen Colton, Executive Director of Guardianship Services in Fort Worth, stood up and told a story she had heard during her childhood. We believe it is a very important concept to remember for these economic times. She graciously gave us permission to share it on our blog. The author is unknown. If you know who wrote this please let us know so we can give proper credit. It is a story of a man who sold hot dogs during the Great Depression.

THE MAN WHO SOLD HOT DOGS

There was a man who lived by the side of the road and sold hot dogs.
He was hard of hearing, so he had no radio.
He had trouble with his eyes, so he read no newspaper.
But he sold good hot dogs.
He put signs up on the highway telling how good they were.
He stood on the side of the road and cried “Buy a hot dog, Mister?”
And people bought.
He increased his meat and bun orders.
He bought a bigger stove to take care of his trade.

He finally got his son home from college to help him out.
But then something happened.
His son said, “Father, haven’t you been listening to the radio?”
“Haven’t you been reading the newspaper?”
There’s a big depression.”
“The European situation is terrible.
The domestic situation is worse.”
Whereupon the father thought, “Well, my son has been to college: he
reads the papers and listens to the radio, he ought to know.”
So his father cut down on his meat and bun orders, took down his
advertising signs, and no longer bothered to stand out on the highway
to sell his hot dogs.

And his hot dog sales fell almost overnight.
“You’re right, son.” the father said to the boy.
“We are certainly in the middle of a great depression.”

Now I am not advocating not listening to the radio and not reading the newspaper. I am not saying you shouldn’t prepare for and make decisions about your organization in light of the economy. What I do think this story is saying is if your hot dogs are still selling, why take down your signs, why stop spreading the word. There are still opportunities out there to sell hot dogs!