Answering the Non-Profit Question + Our New Logo
After wading through lots of information (and talking to a few different accountants), we’ve finally made a decision: we won’t be pursuing 501c3 non-profit status. There were a few reasons we decided against it.
#1. There’s a tricky IRS rule that states that at least 33% of your support must come from the “public” to qualify as a 501c3 “public charity”. Even if local businesses donated the vouchers we re-sell, there would always be a chance that an IRS agent might rule against our 501c3 status in the future. We’d have to devote a lot of time soliciting direct donations from individuals and organizations to ensure that we meet the 33% guideline. This would detract from focusing our efforts on making the ValuStop Shopping Club as profitable as we can.
#2. We’d have to spend a LOT of time learning all the ins-and-outs of compliance for 501c3′s: what forms to file, how often, etc.
#3. We would have to develop our own in-house processes for determining which families to fund with adoption grants. Instead of re-inventing the wheel and spending that money on overhead, we think it makes more sense to donate to non-profits that already have the systems in place. Why create more overhead?
#4. We wouldn’t be as flexible responding to marketplace demands as a 501c3. We’d like to offer our members lots of benefits, like discounted shopping deals and cashback rewards for continued loyalty to ValuStop merchants. All of these things would be a lot more difficult as a 501c3.
Ultimately, we chose to incorporate as a for-profit corporation in the state of Georgia. This doesn’t change our plan to donate 100% of our profits to charities who support the well-being of orphans. (We’ll just have to pay some taxes before the donations go out.) We’ll be practicing open-book management so the public will always know how much revenue we’re taking in and how much in donations are going out.
On another note, we have a new logo! It was designed in-house at a savings of at least $300. So many simple logos have gone on to become ubiquitous around the internet (think about facebook’s logo…). Who knows? Maybe we’ll still be using this one in 10 years: