Posted by Gerry_VT on 7/19/07 6:46pm
Msg #200907

Profit/Non-profit status of NNA

Go to the business filings section of the California Secretary of State's website (https://businessfilings.sos.ca.gov/). Look up corporation numbers C1243331 and C2824925. Click on the corporation names that appear and look at their profit/non-profit status.

Reply by Lee/AR on 7/20/07 10:33am
Msg #200992

My 'understanding' is that they do have a non-profit division/arm/dept/whatever. But, the rest of the NNA is for NNA profit/profit/profit & more profit. If you poke around on their website a bit, there is a blurb in a lower right corner somewhere asking for donations. Tho' I can't stand them, I do have to give them the PT Barnum Award for their marketing: create a need and then fill it.

Reply by BetsyMI on 7/20/07 1:40pm
Msg #201032

My last statement from them not only showed my annual dues but a request for a $20 donation! After all the info here, I am not renewing.

Reply by Vince/KS on 7/20/07 4:50pm
Msg #201058

Profit/Non-profit status of NNA - long

This is not intended to defend NNA as they certainly have enough clout to do that themselves if they see fit. But, many “not for profit organizations (npo)” actually own “for profit companies” as is often required by the IRS.

Many venture into money raising activities so that they may make ends meet and serve the needs of the members without requiring exorbitant dues. While many large organizations depend upon dues and other income, it is often not enough to support the overall needs and goals of many large organizations. If the “npo” organization enters into business relationships that compete with other organizations, those other companies complain that the npo is getting tax advantages that make it difficult for them to compete. So, they IRS started cracking down on npo’s in the 70's for the portions of income made that “unfairly” competes with the “open market- place.”

For instance, hospitals frequently have gift shops that are owned by the hospital and it serves as a major convenience to patient visitors. But, local florists could complain that the npo owned hospital is competing with the local florists and driving them out of business. So, many of the hospitals had to form for profit companies so that visitors could buy flowers and cheer up the patients.

The same is true of other entities, like chambers of commerce. Many have for profit corps that help the organization make ends meet. Even religious organizations are affected by a similar logic. For years, many “famous” ministers not only preached, but also sang and sold records. The recording contracts were not taxed until it was decided that this activity was certainly different than the other and would be taxable.

AARP gets much of its income from “royalties” for the products it sponsors/endorses. Without the income, it is unlikely they could afford the huge amounts of money spent for lobbying - for seniors.

Look at any of the large NPO’s and you will likely find a for profit subsidiary included on the balance sheet somewhere. If the IRS did not require the for profit status of many of these companies, they would enjoy a major tax advantage over other organizations that are trying to eek out a living and also pay uncle sam. In the 80's it was decided that these for profit entities could not be controlled by the same group as the not for profit - identical board are forbidden.

Probably more than you wanted to know, but hopefully at least partially explains the concept. The primary idea often discussed is making the NPO behave like a for profit to “level the playing field” so that the companies may all survive...

Reply by Lee/AR on 7/20/07 9:22pm
Msg #201075

You are absolutely correct. But most people--even the

paying members-- THINK it's a non-profit--which it certainly isn't.

Reply by JanetK_CA on 7/21/07 2:12am
Msg #201085

Re: You are absolutely correct. But most people--even the

Interestingly, Milt Valera, in the article that was referenced here recently, skillfully implied that the NNA was a non-profit organization, while carefully not actually saying so. The informative comments by Vince/KS may very well be the rationalization they use for this, but I see several problems with that - or as Dr. Phil says, "that dog won't hunt!"

First is the concept of "serving the needs of the membership". I think it would be interesting to see how they define both "needs" and "membership". I hardly think it is serving anyone's needs but their own to continue to actively recruit people to get into loan signing when it has been evident for some time that the need for SAs was going to decline when interests rates went up. An organization truly interested in serving the needs of its membership would have been warning us about that likelihood. They also would have long since quit running ads and promotions to continue to recruit more people into the field with misleading information. I won't even get started on the whole issue of certifications and background checks...

He mentioned the need to meet expenses, yet I believe he said that they have hired around 30 new people. I wonder how many of them were hired to support the NSA section (like those knowledgeable(sic) hotline folks, and all their trainers who are traveling the country to saturate more markets with NSAs. And of course there are all the staff people they need to continue to sell us things we don't need, like repeat certifications and background checks.) It almost seems like they've gotten themselves into a ponzi scheme, where they have to continually recruit new people to become notaries and NNA members, because, if this board is any indication, so many refuse to renew their memberships and buy their supplies and services because of their business practices.

I've wondered in the past if perhaps they were just unaware of how they are perceived by those SAs who have been around a while. However, it seems that someone there does monitor this board. (They have played bully here before, as many of us know.) But are any of you aware of any attempt from them to determine what it is that their membership would actually like from them? Have they conducted polls or focus groups? In fact, it seems that the reverse is true. Several people here have mentioned that they have taken the initiative to write to them to express their opinions but were never even given the courtesy of a reply. This hardly appears to be an organization interested in serving the real needs of the community it claims to represent.

This is all just my personal opinion. But it seems to me that the NNA is either cynically arrogant and deceitful, or woefully naive and incompetent in some areas - perhaps a bit of both. I'd sure love to see their business practices investigated - or reformed. We could really use an organization that truly is what they claim to be. Again, this is just my opinion. I'm off my soap box now.

Reply by Harry [NR] on 7/24/07 12:49pm
Msg #201469

Gerry, thanks for bringing some more light to this subject as I'm sure most of the notary community is probably still confused. I thought I'd add a couple more observations and a final comment.

First, other than the foundation, you missed one very important entity: N.N.A. INSURANCE SERVICES, California corporation number C1173306. This entity, like the NNA Press, is a for-profit domestic stock corporation. I suspect a fairly huge amount of N.N.A. revenue is funneled through it.

Second, non-profit status, itself, is nearly meaningless without the single greatest benefit: tax-exempt status. If the National Notary Association (C1243331) lacks this qualification - either because they were unable to initially obtain it or because they lost it due to a change in the character or material function of their business - then there seems to be little point in having a "non-profit" corporation except to say that it's non-profit.

If anyone cares to research the National Notary Association's tax-exempt status with the IRS, all the information you need is on their FAQ page:

http://www.irs.gov/charities/article/0,,id=96583,00.html

In California, I believe you'd need to contact the California Franchise Tax Board (www.ftb.ca.gov) at 916-845-4171.

So, it appears that what you really have in connection with "NNA" are three separate business entities, two of which are officially for-profit, and one tax-exempt foundation. The two for-profits appear to operate under the guise of the single non-profit, as evidenced by the perception that it's ALL the "National Notary Association," which may or may not be tax-exempt.

Harry
Notary Rotary