Muffins and Orphanages

So, I've seen comments left on the blog about how being a registered non stock corp and being a non profit are two different things.

Seeing as I don't live in the US, and that I don't have much (any) knowledge about how non profits are formed, I was in some pretty unknown territory.

I turned to google, without much in regards to results or clear answers.

Enter Jillsmo.  (You know that speck on shit on a bigger pile of shit trying to figure out which piece of shit gave birth to her?)

She's pretty knowledgeable about the non profit sector. (As an aside, she has an amazing blog. She is also effing hilarious. Linky-do )

Initially, I asked for her to explain to me the difference between a non stock and non profit like I was a 5 year old.  

That kind of worked, but I was still lost on a couple of points, so I asked her to dumb it down a little more, and explain it to me as if I were a 2 year old. (This is NOT to say that I believe 2 year olds are stupid!!!)

This was the conversation we had, copy and pasted from facebook chat. 

MonkeyMama: I'm still confused.  lol, maybe, explain it to a 2 yr old? lol I over estimated my abilities to understand lol

Jillsmo: Okay. Mommy makes muffins and sells them in the neighborhood

MonkeyMama: gotcha

Jillsmo: all the money she makes goes into her pocket and she uses it to buy more toys for you. her company is privately owned, but then mommy's muffins got REALLY popular and she started making a TON of money so much money that Daddy, or even other people in the neighborhood, wanted a part of it

MonkeyMama: okay

Jillsmo: so they gave mommy some money to make her muffin business grow, in exchange for a percentage of the money she makes from selling muffins

MonkeyMama: (also known as stocks, right?)

Jillsmo: they work out a deal: I'll give you $XX.00, and you'll give me X% of your muffin sales. Yes! Stocks. exactly. If mommy keeps all her muffin money herself, she is a nonstock company. If she makes deals to sell parts of her profits to Daddy, or to her neighbors, she is a stock company

MonkeyMama: okay, gotcha. But how does mommys muffin sales relate to a non profit?

Jillsmo: okay! If mommy sells muffins for the sole purpose of making money, she is a for profit corporation, regardless of whether or not she does well at muffin sales

MonkeyMama: right

Jillsmo: However, if her purpose is to raise money for the kids in the orphanage, and she has no plans to keep the money for any other purpose, she could qualify as a nonprofit organization. So mommy goes to the IRS and says "I want to give money to orphans and I will do this by selling muffins" and they decide if that's cool (the irs, not the orphans. I'm sure the orphans would be cool with it)

MonkeyMama: okay, so mommy doesn't want to keep her muffin sales, she wants to help the kiddies. So she has to register as a non stock (because she doesn't want to have shares with the neighbours because it's not to line peoples pockets with money). Then she goes the IRS and they like her muffin idea, and tell her she is a non profit

Jillsmo: well, first the irs is going to ask "are you stock or nonstock?" if there is stock, meaning if she has promised her profits to anybody else, she will not get her nonprofit status

MonkeyMama: So JUST because someone has a registered NON STOCK corp does not equal them to being a NON PROFIT/NOT FOR PROFIT, Correct?

Jillsmo: all she has to prove to the IRS is that the ONLY reason she sells muffins is to give money to orphans

MonkeyMama: right because it wouldn't be helping the kiddies. it would be helping the neighbours, if there were shares.

Jillsmo: NO. Nonprofit is determined by the IRS. Nonstock is determined by the STATE

MonkeyMama: Right, but it doesn't make them one and of the same.

Jillsmo: RIGHT! Mommy needs to have a "Mission statement," which is "we want to give money to orphans, and we do this by selling muffins." as opposed to "we sell muffins and if we have any left over, orphans can have some, I guess"

MonkeyMama: Okay, so what exactly does having a NON STOCK certificate from a STATE mean? just that it's a "business" that doesn't share it's profits?

Jillsmo: it means only what the state says it means. it means that you don't share your profits with anybody except whoever owns the company

MonkeyMama: right. Gotcha.

Jillsmo: and now I want muffins

MonkeyMama: okay, SO NOW i get it. lmfao. thank you for the muffin talk  now i do too!

Jillsmo: LOL!

So, there ya have it folks, for those of you who didn't understand the difference between a non stock corporation vs non profit.

Basically, registering a non stock corporation is only a step in the process of filing to become a non profit. Which is why the terms have somehow become interchangeable.

A4CWSN's sister "charity" (that really isn't a charity right now) is at step 3, as far as I can tell.   (Linky-do )

Filing as a non stock corporation in the State of Connecticut gives him this pretty little certificate, which gives him the ability to file with the IRS. The IRS designates the non profit status.  Really, it's just a certificate that makes him look more important than he actually is. A sycophant will think that's cool.  It still doesn't make their donation tax deductible. 

The above certificate allows him to file with IRS. As far as I can tell ( I do have people in the know), filing with the IRS has not yet happened. However "it's in the works!"  Again, just because it's in the works, doesn't make your donation tax deductible either!

So, that's what VSP is.  A non stock corporation, in the state of Connecticut. It cannot give tax deductions on donations.
It is at this point, not a non profit.

Here's your sign.

EDIT: To be clear, this doesn't have anything to do with what A4CWSN is.  A4CWSN is nothing more than "a man and a computer" who is running an illegal charity through a facebook page.