Dos and don’ts of setting prices
Does your organization agonize over setting prices for your products? Next time your staff starts assigning or shifting price tags, consider these dos and don’ts:
- Don’t use a one-size-fits-all formula when setting prices, such as “cost plus a 30% margin.”
- Do weigh what the market is willing to pay on a case-by-case basis and base price on the value of the product or service — for example, an environmental organization’s 2010 T-shirt on the Gulf oil spill clean-up could be priced higher than its 2006 T-shirt on saving the American eagle, which was taken off the “endangered species” list in 2007.
- Don’t feel that you have to charge all buyers the same price: for example, an association member vs. a nonmember attending a seminar series.
- Do consider charging higher prices to some customers and use the revenue to subsidize others via discounts.
State, local governments turn to nonprofits for cash
With the economy still down, city, state and regional governments are looking under every rock for ways to remedy budget shortfalls. Momentum seems to be building to reverse the property and sales tax exemptions of nonprofits. Pittsburgh, Pa., and the State of Kansas, for example, are looking at revoking nonprofits’ property tax exemptions. Kansas is also considering eliminating its sales tax exemption for nonprofits.
Hawaii’s state legislature recently passed a bill lowering the cap for itemized deductions, including charitable contributions.
Other moves that could affect nonprofits include the imposition of new fees and delay of payments under government contracts. For instance, the Minneapolis city council voted last year to subject nonprofits to the streetlight fees charged to businesses and residences. Illinois is reportedly more than five months behind in contract payments to some nonprofits.
Guidance on health care tax credit now available
The IRS on May 17 issued new guidance to make it easier for tax-exempt organizations to find out if they qualify for the new health care tax credit and to estimate the amount of that credit. Under the Patient Protection and Affordable Care Act, for 2010 to 2013 a small tax-exempt employer may be entitled to a maximum credit of 25% of the employer’s health insurance premium expenses that count toward the credit. Notice 2010-44 can be found on http://www.irs.gov/pub/irs-drop/n-10-44.pdf. The largest credit is available to an organization with 10 or fewer “full-time equivalent” employees. But even an employer with 50 employees — assuming most are part-time — may benefit.•