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Non-profit status and warbirds

svcta

"Kids these days"-AAflyer
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Hey, everyone,
I have a question that maybe someone can lend a little insight on. I would like to get some opinions on setting up a non-profit organization around the airplanes that we operate. We've always got a couple of warbirds at any given point in time. The latest is the t-28 as you know and that one has higher operating costs. I was brainstorming ways to build a maintenance fund and generally help us fund the upkeep of the airplane. Taking a cue from the CAF and EAA I was considering setting up a corporation around the airplanes and trying to get a non-profit status. The end goal being to sell 'sponsorships' for differentl levels of benefit. Hats, shirts, rides, etc. I've got a reasonable level of experience with getting merchandise like that made so that's no sweat. And the airplane has great ramp presence and performs like a mustang, so it's a desireable ride platform.

What is the consensus on this? Are there regularoty ramifications that I'm missing beyond the regular ride selling? The -28 is experimental/exhibition, I know, but would the "membership" status of riders ameliorate that problem?
 

stearmann4

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I know several smaller museums (wealthy owner's tax write offs) that "sell" rides in experimental TBMs,Zeros, etc. What they're doing i selling rides, but it is justified as "selling memberships to the museum" which in turn entitles them to a 15 minute warbird ride. They're museum membership ride just happens to cost them around $800. I can't imagine the complexity involved with meeting rgulatory requirements while simultaneously trying to not get the stink eye from the FAA. Lastly, I'm guessing you'll have to get some real consultation from a knowledgeable aviation lawyer to distance yourself from the inherent liability of selling rides in a 28'.

MR-
 

svcta

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I agree about having an attorney look everything over. It's funny, though, with the t-6 our insurance for selling rides was only 500 bucks more a year than standard. The regs are pretty simple otherwise if you stay near the airport from which you originate. The "membership" would seem to circumvent the experimental type cert.
 

BuckMurdock1

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Hey, everyone,
I have a question that maybe someone can lend a little insight on. I would like to get some opinions on setting up a non-profit organization around the airplanes that we operate. We've always got a couple of warbirds at any given point in time. The latest is the t-28 as you know and that one has higher operating costs. I was brainstorming ways to build a maintenance fund and generally help us fund the upkeep of the airplane. Taking a cue from the CAF and EAA I was considering setting up a corporation around the airplanes and trying to get a non-profit status. The end goal being to sell 'sponsorships' for differentl levels of benefit. Hats, shirts, rides, etc. I've got a reasonable level of experience with getting merchandise like that made so that's no sweat. And the airplane has great ramp presence and performs like a mustang, so it's a desireable ride platform.

What is the consensus on this? Are there regularoty ramifications that I'm missing beyond the regular ride selling? The -28 is experimental/exhibition, I know, but would the "membership" status of riders ameliorate that problem?
Not trying to start a fight here, so please don't take it as such.
First, a little wikipedia on the topic;
"Whereas profit-making corporations exist under the premise of earning and distributing taxable business earnings to shareholders, the non-profit organization exists primarily to provide programs and services that are of benefit to others and might not be otherwise provided by local, state, or federal entities. While they are able to earn a profit, more accurately called a surplus, such earnings are retained by the organization for its future provision of programs and services, and are not owned by nor distributed to individuals or stake-holders. In the United States, the laws governing charitable non-profits are based around the Internal Revenue Code, Section 501(c)(3) and the tax-deductible contribution guidelines of Section 170. Corporations classified as such, with gross receipts over $25,000, must report financial activity annually to the IRS, by means of a Form 990.
The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
NPOs can attain tax exempt status but such status is not automatic. Many non-profits are operated by either volunteers, paid staff or a combination of both, usually reserving the senior executive positions to paid personnel while the entry-level and field positions are frequently held by volunteers. Additionally, an NPO may have members or participants or beneficiaries or students etc. as opposed to customers in for-profit organizations. They require a board of directors, governance in accord with by-laws or an organizing document, such as a charter or declaration of trust."

Now my $.02; ..as an armchair economist, if you were to simply do what you've stated..it would appear to me that you are simply trying to find others to pay for the upkeep your toy and to get out of paying any and all taxes associated with said toy. Now--organizations like the CAF (with actual painstakingly preserved pieces of very rare military history --like a B-17), I can sort of understand. A T-38.. not so much.

You'll not that the term 'charity' comes up in many forms in the definition above. Frankly, the only charitable contribution i see here is that of others to you so you can maintain and fly your airpane(s).

My point (as john Q taxpayer)- is that you may want to consider organizing such that a minimum % of the 'membership' funds ( I think > 50% would be appropriate) actually benefit a philanthropic endeavor (such as the American Cancer Society, or The Fallen Heroes Foundation).

Hope I'm not coming off as tears, but that's just how others may view things when you mention the term "non-profit". I know that aviation is ridicuously expensive..and that's why we don't all have our own jets we buzz around in.

-Best of luck, though; I hope you can successfully marry philanthropy with a few mx/upkeep benefits for your birds..
 

svcta

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If you had any idea how passionate and long the conversations that get had in front of our airplanes you might understand. How many times I've entertained the tellers of stories of how someone's father, grandfather, etc. flew during WWII, Korea, Vietnam, etc, you might understand. How many people thank me so many times for explaining why the airplanes were made the way they were, for what they were used, and for allowing people to get on/in/close enough to smell and feel a little of what it was like once upone a time, maybe you could understand. How many pictures people have taken with their children, fathers, grandfathers, brothers, mothers, etc. with a piece of history that they admire as such, maybe you could understand. How many times people have mentioned how much they appreciated that there were people that took the time to restore/maintain/agonize over these old airplanes, well, maybe you'd understand.

What i'm offering is a chance for people who choose to do so to help us out. And in return get a photo, shirt, hat, or even a ride wth the proper contribution. This is precisely what the CAF does, except I have a tendency personally to be far more approachable than those guys ever have been to me. I'm not old, bitter, over protective, or plain surly like most of the CAF members that I've had contact with. That is a club that is far less interested in seeing people cultivate an interest in a particular airplane than it is in having people of means buy their way in and close the door behind them.

I'm not trying to pull one over on John Q Taxpayer. I see people at every airshow that I go to that want to learn more, see more, hear more, feel more. I routinely "miss" most of the show because I'm too busy talking airplanes with those that come to me and start talking. If they would like to chip in, why shouldn't I have a way for them to do so with a little perk thrown in? If they choose not to, what concern is it of John Q Taxpayer's?

By the way, it's a T-28. That's not a jet. And I'm not wealthy.
 

BuckMurdock1

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If you had any idea how passionate and long the conversations that get had in front of our airplanes you might understand. How many times I've entertained the tellers of stories of how someone's father, grandfather, etc. flew during WWII, Korea, Vietnam, etc, you might understand. How many people thank me so many times for explaining why the airplanes were made the way they were, for what they were used, and for allowing people to get on/in/close enough to smell and feel a little of what it was like once upone a time, maybe you could understand. How many pictures people have taken with their children, fathers, grandfathers, brothers, mothers, etc. with a piece of history that they admire as such, maybe you could understand. How many times people have mentioned how much they appreciated that there were people that took the time to restore/maintain/agonize over these old airplanes, well, maybe you'd understand.

What i'm offering is a chance for people who choose to do so to help us out. And in return get a photo, shirt, hat, or even a ride wth the proper contribution. This is precisely what the CAF does, except I have a tendency personally to be far more approachable than those guys ever have been to me. I'm not old, bitter, over protective, or plain surly like most of the CAF members that I've had contact with. That is a club that is far less interested in seeing people cultivate an interest in a particular airplane than it is in having people of means buy their way in and close the door behind them.

I'm not trying to pull one over on John Q Taxpayer. I see people at every airshow that I go to that want to learn more, see more, hear more, feel more. I routinely "miss" most of the show because I'm too busy talking airplanes with those that come to me and start talking. If they would like to chip in, why shouldn't I have a way for them to do so with a little perk thrown in? If they choose not to, what concern is it of John Q Taxpayer's?

By the way, it's a T-28. That's not a jet. And I'm not wealthy.
I do understand how passionate folks can be about old warbirds, and the ultimate sacrifice our service men/women have made in and around them...all the more reason to have some proceeds of a potential non-profit go to benefit an organization like the "Fallen Heroes". Putting an image of your bird/tail #, historical data, and a "Fallen Heroes" logo all combined on a t-shirt or ballcap would make for some VERY nice ramp presence at a table in front of your bird.
-That was the jist of my point...not to just contain charitable donations to benefit only your equipment.
For instance, I am a member pilot (w/ my own aircraft) of "Angel Flight".. which provides free air transportation for patients with $$ hardships.

btw- I mis-typed a 3 instead of a 2-- I know the T-28 is a post-WW2 prop trainer..which was in operation all the way into the 80s. The jets comment was a seperate thought (for effect, i admit). Again, best of luck- however it turns out.
 

svcta

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Absolutely correct. Ours is a Fennec. It has 4 hardpoints and battle damage repair from hits that we assume were sustained in Algeria while the airplane was serving with the French A.F. We have photographs of our particular A/C in the desert somewhere in Africa, either Algeria or Morocco. We know that it was sold to the French A.F. in 1961 and that it returned to the states from Morocco.

AT-28D models were the first type of american A/C lost over N. Vietnam.
 

BE99chick

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tax exempt status

If you call Brenda Anderson at EAA in the Chapter office, she can refer you to a lady (a lawyer) on the EAA legal advisory council who sets up non-profits and gets IRS tax-exempt status for them for a VERY reduced rate. If you aren't an EAA member, find someone who is and ask them to call and get the lawyer's name. If you just try random lawyers, they will charge you a fortune, but I understand this person does non-profit stuff very cheap and is very good. Good luck with your project.
 

svcta

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Thanks for the input, everyone! I appreciate the steers.
 
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