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International Karting Industry Buyer's Guide |
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| EYE ON THE INDUSTRY | |||||||||||||
| MYTH
— NON-PROFIT MEANS “NO PROFIT”
By Darrell Sitarz You’ve heard of the Red Cross, Lion’s Club, Boy Scouts of America, American Cancer Society, International Kart Federation, or your local kart club? They all have one thing in common — they are all not-for-profit or non-profit organizations. A common misconception is that a kart club, under the misconstrued and often misunderstood definition of “non-profit”, is not allowed to make a “dividend” or “financial benefit”. This is NOT, I repeat, NOT a legitimate theory. Of course, anyone who has run a not-for-profit association, organization or corporation knows and understands that it is not the object of the organization to be run unprofitably. Rather, the point is not to translate the “profits” into a monetary gain for the membership or board of directors EXCEPT for reasonable salaries for personnel and for services rendered, etc., if so desired. Profit motive must not be the basic purpose of a non-profit organization, but profit need not be eliminated from all activities. Thus, the normal test for non-profit status is whether or not the dividends or financial benefits are distributed among the members. Under this standard, the basic purpose for the organization must be primarily to service the public or membership and that the profits should be devoted to that end. Non-profit organizations
can be classified into 5 major categories:
There are two basic types
of non-profit organizations:
Federal non-profit organizations usually benefit from a number of special advantages which are not available to state chartered non-profit organizations. This may include a partial or full exemption from federal and state income taxes as well as special postal rates. There are several types of non-profit organization designs where are available, but only two of which may apply to kart clubs. They are the un-incorporated association and the corporation. THE ASSOCIATION — An association is usually a group of persons joined together with a common purpose with or without a charter. Usually treated as a corporation or quasi-corporation by tax authorities, whether incorporated or not, un-incorporated association have many disadvantages. This is why most associations nowadays are, in fact, corporations. THE CORPORATION — This is by far the most popular form of non-profit organization. A corporation is designed as a legal entity with its own name and is organized to meet special requirements. One of the main reasons for incorporation is to insulate the members from personal liability. What may a non-profit
corporation do?
One thing to keep in mind: however your kart club has been designed, it is very important to run it as a business, even though the basis for its existence is not profit for the membership. As a result, goals for the organization could have a substantial bank account, the purpose of which can include future capital improvements, equipment or any number of items. This is to say that kart clubs may, of course, sell products, advertising, food items, or souvenirs, etc. with those monies going into the general fund. If you have any questions, it is suggested you contact your attorney, your individual Secretary of State’s office or accountant. For more information on
managing and understanding a non-profit organization, I suggest Managing
The Non-Profit Organization by Peter F. Drucker, Harper Publishers, 235
pages, $22.95.
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Kart Marketing Group, Inc. Post Office Box 101 Wheaton, IL 60189 USA Telephone: 630-653-7368 Fax: 630-653-2637 Email: karting@msn.com |
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| Neatconcept, Inc | |||||||||||||
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