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imho donations are going to shift the burden back to the faithful. This is a normal business expense and the savings will help everyone. As far as source for a possible loan, I would ask our bank first and then open it up to members and outsiders take the best deal. The bank is usually the cheapest money. On Feb 1, 2018 11:00 PM, "Richard Laager" <[log in to unmask]> wrote: > On 02/01/2018 09:35 PM, Jason Hanke wrote: > > How about getting a loan to cover the difference? That way we could get > > the savings and not affect the revenue percentages. > The message of mine you replied to was about the 85% rule, which applies > to revenue. That was in the context of donations. We need to ensure > that, each year, our revenue is at least 85% derived from members. For > small donations that together don't add up to anywhere near 15%, this is > not a concern. If someone wants to make a _sizable_ donation or we get a > lot of small donations, that should be okay as long as they are from > members, but we may want to double-check with a professional first. If > non-member donations would push member-derived revenue under the 85% > mark, we lose our Federal tax-exempt status for that year. > See: https://www.irs.gov/irm/part7/irm_07-025-012 > > However, there is a _separate_ issue as to whether donations from > members count in the same way as purchases (i.e. port fees) when > calculating capital credits. If someone wants to donate, we'll need to > seek professional guidance about how to handle that. Either way, I > imagine we would be able to accept the donation. > > As far as I can see, loans aren't relevant to the 85% member revenue test. > > Putting three year's worth of major expenses into one year would have an > effect on capital credits. As far as I know, we are accounting on a cash > basis. By "bunching" expenses into the first year, our profit will be > lower in the first year and higher in the second and third years. This > means that members will accrue lower capital credits in year one and > higher capital credits in years two and three. If everything else was > equal (no members come or go or pay different port fees), this would be > irrelevant. But in practice, it will create some variation. With cash > basis accounting, it seems to me that a loan should smooth that out. > > Is that variation in capital credits a problem? Probably not. It seems > like it's going to be part of the natural cycle. I expect our typical > pattern over the long term will be to build up cash for a while and then > spend a big chunk on switch hardware before starting the cycle over. > > -- > Richard >