On Mon, 12 Jul 2004, Michael Black wrote:
"D. Stussy" ) writes:

1) I have not made it any secret what he has done to one of my associates by
misreporting the story he was involved in. 2) If newsline is supposed to be a
"non-profit" operation then why is BP practically LIVING off of the donations?
There are laws that govern what "reasonable compensation" is for a non-profit,
and he's exceeding them, as I have previously demonstrated.

Where in the world do you get that weird concept?

From his public statement that it costs newsline $1k/month to do its business,
when his nearest "competitors," RAIN and TWIAR do it for $100.00/month. The
only way that it can cost newsline 10x as much is if he is compensating people
for the activity (which in itself is permitted), but it is the extent of the
compensation that must be occuring that is of concern.... The "ARRL news" is
not comparable because it's part of a larger organization that does other
things and we don't have the requisite information to separate just the
news-gathering costs from the other activities.

Non-profit means there can be no profit, to pass on to shareholders (or
whatever).

You can have a non-profit organization that makes money. But, they have
to put the profit back into organization.

....But not into the shareholders' or employees' pockets beyond "reasonable"
compensation. The issue is that in this case, it appears that the compensation
exceeds that which is reasonable after comparison to that of his closest
competitors....

And any but really small non-profit organizations, such as the local ham
club, have staff. What they get paid may depend on the financial soundness
of the organization, but there is nothing to limit what they get paid simply
because it's a non-profit organization. I'm sure many non-profits would argue
that by paying a good salaray to key people, they are able to operate well.

Ah, but when more than 50% of the gross receipts go to salary, then what it
really becomes is a conduit to merely compensate.... Let's look at the
information that has been made public about this type of activity:

The competitors report that it costs them $100/month in phone calls and other
administrative functions, so lets give ARN that. They do not compensate their
news gatherers.

In addition to that expense, ARN maintains and distributes its bulletin by
phone line (an expense that TWIAR and RAIN don't have). Various phone numbers
across the country are sponsored by OTHER GROUPS, but the Santa Clarita main
number ARN pays for itself. Between Verizon (formerly GTE) and SBC (formerly
Pacific Bell), Verizon has the higher rates. [I don't know which telco
actually serves the number, but even if we assume the more costly one, at
worse, we're overestimating the cost but not by much.] A flat-rate area phone
number costs about $29/month after taxes, but lets assume that his call to
update that isn't local but intra-lata long distance, so let's call that
expense $50/month.

We've now accounted for $150/month of expenses, but ARN reports that it costs
$1k/month, so where is this other $850/month actually going? There may be some
additional overhead for the web site and domain name, but there is no way that
one will find enough of those or any other expenses sufficient to explain the
cost of $1k/month OTHER THAN salary that BP puts into his own pocket. I
conclude that about and no less than 75% of every donation ends up in his
pocket - and that is a conservative estimate.

If this is wrong, then why, when I challenged him on this, he would NOT
disclose where or how the donated funds are being allocated? My assertion is
simple: He doesn't want to tell the public that this is really a scheme.
That's the ONLY reason why any [IRC 501(c)(3), since he claims deductibility]
non-profit would not provide a breakout of how their donations are applied.

Note: If ARN is a non-profit, but not under subsection 501(c)(3), then
donations to it are NOT tax deductible (nor is a form 990 necessarily required
by them - but a different form may be), but then to state to the public that
the donations are deductible would be an act of fraud that is prosecutable.