Crawl for Cancer - Why We're Proud of 26%!
Some time ago, the Columbus Dispatch ran an article about Crawl for Cancer titled, "Bar crawl benefits charity - and itself." Did anyone notice that it never went on to mention how CFC benefits itself?
I think it is important for those involved with our organization to understand the facts.
Here's Crawl for Cancer's business model in a nutshell. We purchase goods and services to put on a pub crawl. Our revenue comes from the markup.
There's one fact that biased journalism tends to leave out of its reporting: Unlike a charity, Crawl for Cancer receives no free money. Think about that. CFC does not accept donations. ALL of our revenue comes from selling things. Things that we have to pay for first. That includes beer (some people have said they thought the beer was donated. It's not). So if you want to compare apples to apples, compare us with any other organization that does not accept donations. Or conversely, take your favorite charity, remove their donation figures, and then consider how efficient CFC is. We're only a "for-profit" because we have no alternative. Here's what we do instead: we donate 100% of our profit to the charities we serve.
Let's consider another figure. Payroll. It's right on our FAQ. The total wages for our company comprise only fourteen percent of our gross revenue. That represents all of the money that went for "personal gain," i.e. payroll, to run the company, across fifteen states and over twenty cities. There's no other hidden income or benefits. No health care, no company cars, no expenses paid for personal use.
So, why isn't CFC a charity? It's very simple. We can't be. Regardless of what you're selling, the IRS does not grant tax exemptions for money paid in which goods and services are expected in return. There's nothing ominous about our lack of a 501(c)(3) status, we're just not eligible for it.
2012 was a banner year for us. 26% was the highest figure we've posted. Historically we've been closer to 22%. For our 2013 tax year that the CPA's turned in last month, it's 23%. It's an impressive profit margin, and we give it all to the charities that mean something personal to us. So yeah, we're proud of those numbers.
We had a good question on our Columbus Facebook page that might help clarify things better.
I've been curious about your organization since I first learned of it. My son is a stage 4 neuroblatoma survivor and I greatly appreciate your involvement with NC4K [Nellie's Catwalk for Kids]. The question I have is about this statement from your response "So, why isn't CFC a charity? It's very simple. We can't be. Regardless of what you're selling, the IRS does not grant tax exemptions for money paid in which goods and services are expected in return. There's nothing ominous about our lack of a 501(c)(3) status, we're just not eligible for it." One of my favorite pediatric cancer NPOs raises funds by selling items. I pay money to them for goods in return. Their profit goes towards kids. I know for a fact where their money goes. They are a 501(c)(3). So what am I missing? Not trying to cause an issue because if NC4K Is willing to parter with you then that's enough for me to trust you. I'm genuinely curious.
You're not causing an issue, Danny, we appreciate the opportunity to respond. It's not that 501(c)(3)'s cannot sell products, they certainly can. Consider the 501(c)(3) Girl Scouts, for example. When you purchase cookies from them, you're helping them raise money. However, your purchase is not tax deductible. At the same time, the Girl Scouts organization depends strongly on donations. You can give online, by mail, at meetings, via membership, fund drives, scheduled deductions, bequeathing stocks and securities, etc. In other words, entities that choose to become 501(c)(3) do so because they engage in activities that are eligible for tax deductions. Crawl for Cancer, on the other hand, has only one revenue activity. It isn't eligible for a tax deduction. Now, there are some ways around it, and smaller groups can typically get away with it, especially groups whose primary fundraising purchase isn't light beer.
For example, a car wash business pays taxes, a car wash fundraiser does not. The latter avoids taxes by having a "suggested donation" for the service. And often, even the soap and water are donated. The downside is that a dishonest individual could actually show up, pay nothing, and the group would be obligated to wash the individual's car. Therein lies our problem. For obvious reasons, we could not have a "recommended donation" for participation in a pub crawl.
If you still have questions, please, ask. You know, when we incorporated years ago, we actually thought we were going to be a 501(c)(3). That was our goal. But, due to the above and the general anxiety of a public tax break for a beer-based event, it became apparent we could serve our goals simply by donating all of our profit. So that's what we've been doing ever since.