GROWING NOT – FOR - PROFIT REVENUE USING A PERSONAL FRANCHISE
Written by Andrew Van Valer With contributions by Robert Ellis Principal - The Ellis CPA Firm PC Tax Strategist for Fortune 500 companies, NASDAQ companies, Middle Eastern potentates, the richest man in America and thousands of small businesses. http:// www.elliscpafirm.com Sherry Watson Founder and CEO - The POWER of GRANT MONEY™. Proven track record working with 501 (c) (3) Corporations as well as joint ventures and businesses. http:// www.uslandco.com/reiproducts/product.aspx?id =6478
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Thank you for your commitment to making the world a better place through your non-profit. We come from the non-profit world ourselves and are pleased to offer this resource to help you accomplish one of the main challenges presented to non-profits – revenue! Do you find that fund raising is challenging, that there is an increasing level of need and that you are competing with a larger field for less support dollars? Also, do you find that fund raising demands a lot of attention and energy and that resources that could be used more effectively serving your main cause get redirected toward fundraising? We have found an outstanding, proven, solution to helping you increase your available revenue while getting back to serving your cause. What makes this solution so remarkable and accessible to your team is that it works of the premise of “Think globally while acting locally”. You are partnered with community members and domestic companies to get ongoing, consistent funding. What makes this so outstanding is that it is really easy to take advantage of and leverage a growing business trend to support the world of not-for-profit companies. To you, this means less “begging for dollars” and more automated revenue.
How this is accomplished is through a 50 year old, proven industry, that we started working with over a year ago to reengineer and guide toward serving a not-for-profit entities like yours. The business is Personal Franchising, and it leverages established business systems and distribution networks to provide high quality, exclusive products and services to consumers directly. Definition of Personal Franchising Personal Franchising is reengineering of the traditional business called multi level marketing (MLM) that has exploded as an industry since it’s inception in the late 1950’s. With the rapid expansion of online social networking and blogs, the industry has become one of the most important marketing channels for explosive growth for both the Personal Franchisee and the Personal Franchisor. Zyzyrgy specifically set out to provide the next level of social business building through a use of a Peer Network building low cost of entry businesses in Personal Franchising. Personal Franchises are audited and their processes are scrutinized to insure that they offer a well formed and solid operating business opportunity for the Personal Franchisee. Standardized training has been developed to help both the Franchisor and the Franchisee develop businesses based on solid business practices and the guidance of their passion as the catalyst for joining the franchisors entity. More information on Personal Franchising can be found at www.zyzyrgy .com
Think of a standard franchise which sells its own branded products exclusively, like a McDonald’s or Quiznos. The Personal Franchise industry is similar, with a couple of advantageous key differences.
Personal Franchises are low-cost-of-entry, franchised businesses that people can build from their homes without high investment dollars in retail locations or high overhead.
Personal Franchises are available globally and accessible to driven, motivated individuals who look to enhancing their finances while building community.
Because of the proliferation of large “big-box retailers” it has been harder for American companies to get products on store shelves, so your choices are limited to what a big-box retailer offers, which may be low quality or from companies who have no history of giving programs.
This is where Personal Franchising comes into play in supporting your non-profit. You have access to top business models and products and services that pay your organization the revenue that a retailer would typically make when you share this product with your community (supporters, friends and family). All you are doing is offering a better solution, that is often less expensive to the consumer and provides a revenue stream to their favorite charity, in this case it is you! We have profiled some top personal franchises below, that would service your community well and provide a constant revenue stream each time your community used the service. There is a travel business, shopping portals and a stay-in-touch greeting card business. All of these businesses are used by non-profits to not only offer the not-for-profit an alternative to what they are currently using, but also provide them revenue back on each purchase they make and each purchase made through their own community. Imagine thousands of dollars or money each month that consistently rolled in with only a small change in your buying habits and those of your community. Most people buy some kind of travel a few times a year and almost everyone sends greeting cards for birthdays, holidays, special events or for business follow-up. Here is a diagram on how the process works.
Not For Profit Entity Personal Franchise Personal Franchise Supportive Community Buys Good & services Through Personal Franchise Revenue Percentage Directly to Not For Profit
Below is the profile of a few Personal Franchise providers who work well for Not-For-Profits as a simple redirection of buying dollars. For the other opportunities go to www.zyzyrgy.com and look under non-profit solutions. Send Out Cards Through the revolutionary keep- in-touch system created by Send Out Cards we enjoy helping you become a sender of cards, whether you are sending for donations, thank you notes or to stay in touch with your community. Recognizing birthdays, anniversary or special occasions lets your community know you are thinking of them and it keeps your name in front of them! You can use the service to keep in touch, express gratitude, and reach out to others in a positive way including donations. The system is internet based, so it is easy for your offices around the country to use or any of your community members who have access to a computer with an internet connection. You can even create customized messages that you store and can be accessed by your whole team to send out to their own community. We offer special accounts that enable you to receive compensation as you help others become senders of cards if they would like to be a Personal Franchise yourself or within your Not-for-Profit generating cash flow to help more people in your cause.
Your Travel Business (YTB) Travel is one of the most researched topics on the internet as well as one of the largest domestic industries and continues to expand with the growing number of baby boomers. What a great market to tap into to help your not-for-profit to create additional cash flow to do the things your organization is tasked with. Everyone loves to travel! Through Your Travel Business we enjoy helping your bring further income into your organization by tapping into the mega market of travel. A link can be placed seamlessly on your website, which will allow your community to book travel through your site using sophisticated systems that we find easier to use than such travel sites as Expedia and Travelocity.
Market America and Shop-To-Earn Market America and Shop To Earn both sell everyday consumable products you have in your home. They are very similar in that they pay you back a percentage for your purchases and are creating the economy of the future with their web portals where you can find anything you want or need in a single location. The companies offer several different partnerships that provide products in Health and Nutrition, Cosmetics, Business, Automotive, Apparel, Skin Care and Major Department Stores. If you the product and cost is the same, why not purchase supporting your favorite charity, ministry or non-profit? Each also offers their own line of products. As much as each business is similar they are also different and offer different benefits.
According to Conel/Roper Study - 86% of American would likely switch brands to support a cause when prices and quality are equal. We offer special accounts that enable you to receive compensation as you help others use your travel. For your further information on our latest concepts and partners, go to www.zyzyrgy.com and look under channels for non profit solutions. HOT FACT Which One Serves You Best?
Overview Many Not-for-Profits and Personal Franchisors are overlooking one of the best opportunities available to them. For the Not-For-Profits it is increasing their funds and for a Personal Franchisor in growing their businesses. Not for profits are already focusing on building and developing their communities. It is great opportunity to promote sales through your local nonprofit or charitable organizations in your area. The Personal Franchise Owner makes money and so does the Not-for-Profit organization. There are many misconceptions about Not-for-Profits using Personal Franchising or Party Plan opportunities. Partnering the two can be solutions for both. Handled correctly, the benefits of a business owner’s involvement with an NPO are mutual and substantial. The tax-exempt organization receives a source of funds that are necessary to carry out its functions and to support the causes that are deemed worthy enough for tax-exempt status. The network marketing company gains access to a potentially large and motivated customer base. Overnight, the membership of a charitable organization may become an instant sales organization of hundreds of thousands. The charitable organization raises these funds for worthy causes and a network marketing company finds a new market for its products, it is a great match!
The organization can also use it for education - serve first and benefit later. Many organizations have false hopes because some of the industry in the past focused on chasing money. If money is all you are chasing, we have seen many “dead bodies” as a result. The same tool can be used if managed properly to “raise bodies” by using the teaching of many of the religions to serve first giving people an opportunity to learn and give and the money and joys will follow. This is especially true if one follows their passion, gives and then one will receive. We are seeing more and more Personal Franchisors creating special department just to support distribution agreements with Not-for-Profits. Your Travel Business (YTB) is a great example. A school, church or local charity can place a link for travel on their website and in their mailings. Who doesn’t travel? Why not support your local charity by booking the travel through your organization of choice and having some of the profits go to them? In many cases the cost is similar or less then the costs found elsewhere for the same product or service – and you get better customer service.
Use of charitable organizations for network marketing distribution can work like this:
Not-For-Profit Registers as a Distributor
The charitable organization signs on as a network marketing distributor. The charitable organization in turn sponsors its membership as independent distributors. The charitable organization sells products and profits. If the new relationships believes it is going to make a significant amount of money over $????, we suggest the formation of a wholly-owned "for profit" corporation for the new activities to separate the funds incase it grows to a point where it might jeopardize you not-for-profit status.
Not-For-Profit Promotes a Distributor
The charitable organization promotes on their website and gives access to the not-for-profit members and community for recruitment and sales, and to encourage voluntary contributions back from the Distributor.
One Time Promotion
The charitable organization promotes on their website, newsletter or other word-of-mouth means to their community for the sales of a product or service and period of time and the profit or percentage of profits will go to the organization.
Use of tax-exempt organizations for personal franchise owners and the not-for-profit can be a great benefit for all of the parties involved. The most important advice that can be given, however, is that the company, the personal franchise distributor, and the tax-exempt organization should be fully briefed by professional tax, accounting and legal advisors on the requirements as well as the tax ramifications and legal aspects of the relationship.
Thank you for reading the Zyzyrgy resource. We are continuously working to provide leading resources to help people meet their financial goals through Personal Franchising and Peer Marketing. Please visit or contact us if we can be of any resource to your or your organization. ____________________________________________ Coming Shortly to www.zyzyrgy.com How to Start a Personal Franchise as Not For Profit.
Tax-Exempt Status According to my knowledge, a not-for-profit can engage in profit making activities. The only requirement is filing a 990-T and paying tax on the non exempt activities. As far as I know it doesn’t affect the non profit status, unless the non profit functions are abandoned. The extent to which a tax-exempt organization may engage in income-generating activities without jeopardizing its exempt status is something that is different for every organization. We suggest you talk to a specialist in this area that truly understands this area. It is difficult to find them. We suggest contacting Ellis CPA Firm PC by going to www.elliscpafirm.com. There are two possible consequences to an organization conducting a trade or business. First, the organization may be subject to unrelated business income tax. In addition, the organization may be denied tax-exempt status entirely if the trade or business is carried on to such an extent that it constitutes the primary purpose of the organization. Caveat for Tax-Exempt Organizations A tax-exempt organization, acting as an actual distributor of products or services, disseminated through a network marketing arrangement, is clearly engaged in a trade or business. In general, there is little relationship between the tax-exempt purposes of the organization and the products that are being sold. Finally, the duties of the charitable organization and its distributor are typically ongoing rather than sporadic. Therefore, income of an exempt organization derived from network marketing distributor activities will be subject to unrelated business income tax. Network marketing companies' distributors who sign up charitable organizations should be careful to point this out to the charitable organizations when they sign up as distributors. The charitable organization should also be careful not to allow the network marketing distribution activity to endanger its tax-exempt status altogether. Under § 501(c)(3) of the Internal Revenue Code, tax-exempt organizations must be organized and operated "exclusively" for nonprofit purposes. The IRS has interpreted this provision to mean, however, that an organization which engages "primarily" in activities that further its exempt purposes will be considered to be operating "exclusively" for exempt purposes. However, the operation of a particular activity may jeopardize the organization's exempt status if the activity is more than "insubstantial" in comparison to overall organization activities. Unfortunately, few cases discuss or define "substantial" in quantifiable terms. In one recent case, the Tax Court held that a tax-exempt organization, which derived more than 25 percent of its revenue from a business activity, was "too substantial" and thus it was denied its tax-exempt status. It is unclear from the opinion whether 25 percent is the "high water mark" to be applied in all cases or merely the line applicable to the particular facts in the individual tax case. Without further guidance, charitable organizations, which are engaged in network marketing activities, must carefully monitor their activities to assure that the activities do not become "too substantial," although just what constitutes "too substantial" is as yet unclear. REFERENCE MATERIALS
Wholly-Owned Profit Making Subsidiary The least risky method of collaborating with an NPO is through the establishment of a wholly-owned subsidiary corporation to engage in business on the NPO's behalf. This corporation could be signed on as a distributor in the same manner as any individual. The corporation would be taxable on its income. Dividends paid by the subsidiary to the tax-exempt parent, however, would not be unrelated business income to the parent by virtue of § 512(b)(1) of the Internal Revenue Code. IRS letter rulings to tax-exempt organizations desiring to do business, indicate the appropriate business structure for such an arrangement. In the private letter ruling, a tax-exempt organization began operating as a distributor of a food product and enjoyed some success in the next year. The organization did not want to jeopardize its exempt status. Therefore, it set up a wholly-owned taxable subsidiary to act as distributor of the food product, and the exempt organization would be paid through dividends. The IRS stated that for federal income tax purposes, a parent corporation and a subsidiary are considered separate taxable entities, so long as the subsidiary has a legitimate business purpose and the parent corporation does not completely dominate the day-to-day management of the subsidiary. In that § 512(b)(1) of the IRC excludes dividends from the definition of unrelated business taxable income, the dividends would not be taxable. Unrelated Business Income The Internal Revenue Code imposes a tax on the unrelated business income of otherwise tax-exempt organizations. "Unrelated business income" includes income derived by an organization from any unrelated trade or business regularly carried on by it. However, the first $1,000 of "unrelated business income" is not subject to tax. It ought to be noted, however, that an exempt organization is entitled to only one $1,000 deduction regardless of the number of unrelated businesses in which it is engaged. The IRS has been fairly generous in terms of exempting unrelated business income of charitable organizations when the business activity is engaged in only discontinuously or periodically, for instance, for a period of a few weeks per year. For instance, the IRS regulations specifically provide: “ certain intermittent income producing activities occur so infrequently that neither their recurrence nor the manner of their conduct will cause them to be regarded as trade or business regularly carried on. For example, income producing or fund raising activities lasting only a short period of time will not ordinarily be treated as regularly carried on if they recur only occasionally or sporadically. Furthermore, such activities will not be regarded as regularly carried on merely because they are conducted on an annually recurrent basis. Accordingly, income derived from the conduct of an annual dance or similar fund raising event for charity would not be income from trade or business regularly carried on [emphasis added]." REFERENCE MATERIALS