Not-For-Profit Gaming Company?

[Walt Freitag]

This sounds like a great idea, but I don't think the prospects for meaningful nonprofit (that is, tax exempt) status are good. There's more to nonprofit than not earning a surplus; there are a whole raft of strict rules for what types of activity can be engaged in.

From a business services Web page:

What purposes are valid for a nonprofit?

To qualify for federal tax-exempt status, the nonprofit corporation must be organized and operate for some religious, charitable, educational, literary, or scientific purpose permitted under 501(c)(3) of the tax code.

[snip]

The literary purpose includes writing, publishing and distribution of books which are directed toward promoting the public interest rather than engaging in commercial book writing and selling.

The educational purpose is a broad purpose that allows instruction for both self-development and the benefit of the community.

What exactly all that means I don't know. But it seems like if it were that easy to perform business support services as nonprofits, everybody would be doing it. For example, every janitorial service company that didn't care about making a profit (as long as it could cover the salaries of its workers and managers) would organize as a nonprofit.

But I may be wrong. Maybe all it takes is a good laywer to come up with a play off the educational or literary angle.

And in any case, it's still an interesting idea, even if it can't operate tax-free.

- Walt

[Clay]

To be more specific, the test for a 501(c) is that your primary source of revenue cannot also be your group's primary activity.  That makes the publishing company idea somewhat dicey.

[Valamir]

I think a better bet would be not to worry about "not for profit" in the IRS sense at all.

Rather how does one design a fulfillment center that is not intended to be a profit center for the business.  The biggest downside to using a distributor or even a service like Wizard's Attic is that they (rightly so) expect to make a profit.  

Can the essential fulfillment services piece of distribution be organized in such away that it mostly or completely pays for itself, but isn't owned by an independent third party looking to make a profit off of providing the service.  

I'm thinking the answer to that is no for individual mid-tier companies.  Its too much work for the designer/owner to do on an ongoing basis (and not wind up like James Wallis) but the company is too small to afford to hire someone full time to do it.

I'm thinking the/a solution lies in the willingness of small and mid tier publishers to pool their resources into a common fulfillment center.  By combining several companies there would be a better chance of having enough product being moved to justify and afford the expense of hiring a person responsible for handling fulfillment.  A centralized place to place orders rather than every company having their own direct sale website would also serve to enhance cross selling and make the site more of a "first stop destination" the Wizard's Attic site is for me (or at least was before it became d20 central).

Since the fulfillment center would be essentially owned by the publishers it wouldn't need to generate a seperate profit to pay a third part, and those profits that usually accrue to the third party would instead be captured by the publishers.

Eventually if the number of member publishers (and recognizeable personages of industry repute participating) were to grow, it would be become a viable alternative for retailers to place orders across multiple companies and product lines.

[szilard]

Is anyone else thinking "fulfilment house" thoughts, especially in terms of small press direct to consumer?

Interesting. How do you see that working?

I was thinking something more along the lines of a not-for-profit distributor specializing in independently-created games... but...

~szilard (who works for a different sort of non-profit)

[contracycle]

hmm, me too.  I suspect it would be difficult to claim that the NP is doing pro bono work if all it is doing is acting as facilitator between established market movers.  I would expect the response would be "so why donl;t you just do this as a business, if you think there is demand?".  An organ aimed at writer-support, or as a hobby advocacy body* whic, as it happened commissioned printing of games that otherwise would not see print, might have a better case to make.

* Considering the degree of slander directed at RPG, I think we could easily make the case for an advocacy "gamers rights" (shudder) group.  To work for the ability to game free from harrasment and persecution.  The only problem I see is it is rather unlikely the gamer community would cohere around such a body.  But that doesn't necessarily matter.

[MK Snyder]

Non-profit organizations have filing requirements beyond those of for-profit businesses. You have to have a board of directors, by-laws, board meetings...it's a real pain in the behind.

Unless you are planning on both not making any money, and putting a lot of effort into soliciting donations, it is not worth it. That's beyond the question of defining rpg's as "educational" or "religious" material.

If you want to run a company that happens to not make money, that's easy. Just run a company that happens to not make money. If you don't make money, you don't have to pay taxes.

[xiombarg]

If you want to run a company that happens to not make money, that's easy. Just run a company that happens to not make money. If you don't make money, you don't have to pay taxes.

But doesn't a "official" non-profit organization get other benefits besides a tax break?

[MK Snyder]

You can ask for, and recieve, donations; and many large corporations offer matching funds for employee donations. The donors in return get a tax break.

Plus there are government contracts available, or grant monies from foundations and universities and churches and what-not.

For none of which I foresee an RPG publisher or fulfillment house being eligible, unless it was linked to an artistic or cultural small press house, or psychological services for homeless youth, or the First Church of Gygax. All of which would have to be convincingly documented and I woul dhate to see the newspaper stories that could result.

[szilard]

You can ask for, and recieve, donations; and many large corporations offer matching funds for employee donations. The donors in return get a tax break.

Plus there are government contracts available, or grant monies from foundations and universities and churches and what-not.

For none of which I foresee an RPG publisher or fulfillment house being eligible, unless it was linked to an artistic or cultural small press house, or psychological services for homeless youth, or the First Church of Gygax. All of which would have to be convincingly documented and I woul dhate to see the newspaper stories that could result.

Well... an organization dedicated to the promotion of independent and innovative role-playing games with several program areas (something like the Forge, but organized, perhaps with an additional focus on how role-playing can serve society in a variety of ways) could almost certainly qualify as a nonprofit.

I don't think it would be out of line for such an organization to have something like a fulfillment house, given that it would be substantially related to the purpose of the nonprofit. Generally, income-generating programs of a nonprofit that are substantially related to the nonprofit's tax-exempt mission are themselves tax exempt.

~szilard