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Capitalists in Strasburg
https://www.rypn.org/forums/viewtopic.php?f=1&t=20025		 Page 1 of 1
Author:  robertjohndavis [ Wed Mar 01, 2006 7:28 pm ]
Post subject:  Capitalists in Strasburg
The thread on the Tidewater tank at Strasburg was quite intersting... More so personally since they were part of my childhood railscape along with the Blue Comet obs that sat by them.

Whoda thunk that the obs and all three tanks would end up "saved" only to have the tank that went to a for-profit venture be the first to be restored?

The other tanks are safe for now, but as Eric pointed out one at least needs a home. That obs went to a non-profit and then to private hands where it awaits a better fate than its vandalized history in "preservation."

It certainly bucks the conventional wisdom that grants or govt dollars are the only way to go.

Who else is a position to carry out for profit restorations such as this?

Rob
Author:  Alexander D. Mitchell IV [ Wed Mar 01, 2006 8:54 pm ]
Post subject:  Re: Capitalists in Strasburg
I'm not from the Strasburg Rail Road.

But I think I know enough about the overall economic picture of such operations to know something:

A truly, 100% for-the-bottom-line operation couldn't justify the restoration of the freight cars on the Strasburg based on economics alone. It's not like they have Hollywood film projects shooting "Raintree Country" and "Hello Dolly!" every few months. Even the various photo charters are probably pretty much break-even, if all the accounting were properly applied.

The Strasburg RR does what it does because they care about their operation and the equipment in question. They benefit preservation by holding on to all these treasures that someday may take a place in the museum across the street (and some pieces have--the Mack railbus, for example), but in the meantime are authentic period pieces decorating the nearby tracks, creating an atmosphere, and acting as a "billboard" for the railroad. It's the reason Strasburg IS Strasburg, and not just another "quainte Amish country" tourist trap or sterile-as-Disney theme park with automaton "cast members".

The Strasburg management could easily take a cheaper, more efficient route and have an easier life. And we might as well plop them on the Florida Keys, Orlando, or some other tourist trap Hades, if that's what they're about. Instead, we get restored and well-cared-for vintage freight cars. Par for the course in Britain, rare here.

Thanks again, Strasburg Rail Road.
Author:  Erik Ledbetter [ Wed Mar 01, 2006 8:57 pm ]
Post subject:  Re: Capitalists in Strasburg
robertjohndavis wrote:
Who else is a position to carry out for profit restorations such as this?


Grand Canyon certainly has the capability, though they don't do this sort of thing to my knowledge. Maybe Conway. Valley has the capability but their finances are pretty tight these days.

Quite a few narrow gauges would have the capability: D&S (but they already have enough freight stock on hand). WP&Y. Tweetsie. EBT (but like D&S they need more stock like a hole in the head).

robertjohndavis wrote:

It certainly bucks the conventional wisdom that grants or govt dollars are the only way to go.



Quite right, nothing necessarily makes the nonprofit better run or more efficient. The status does have three advantages: nonprofits can often receive donations of equipment from government entities, they can offer tax advantages to donors of cash or equipment under some circumstances, and they have a legal obligation to distribute their assets to other nonprofits if they dissolve or fail. A for profit's assets, by contrast, are exposed to creditors in the event of financial failure.

Of these three points, the last is most significant in my mind.
Author:  Dave [ Thu Mar 02, 2006 8:08 am ]
Post subject:  Re: Capitalists in Strasburg
Being non profit does not equate to obtaining grants or government dollars. It isn't even a requirement.

Grants and government dollars can have some not too enjoyable strings attatched, too. It can be cheaper paying for a simple job out of pocket than paying for all the requirements of using granted funds to carry it out with the many layers of added complexity and bureaucracy.

I'd really like to see more government funded programs for simple and relatively small, low cost projects that are managed more along the lines of private sector business practice. Small Starts and New Starts seem to be heading in that direction - would be nice if that would continue.

dave
Author:  Erik Ledbetter [ Thu Mar 02, 2006 1:21 pm ]
Post subject:  Re: Capitalists in Strasburg
Dave wrote:
Being non profit does not equate to obtaining grants or government dollars. It isn't even a requirement.


This is a very good point.

Other than the dissolution provisions, the only really meaningful difference between a not-for-profit and a for-profit organization is disposition of retained earnings (i.e, excess of what you took in over what you spent at the end of the fiscal year).

A for-profit's retained earnings are "owed" to the shareholders and may be paid to them as dividends; a not-for-profits' retained earnings are reinvested in the organization.

There is no obligation that a not-for-profit solicit grants or rely on state funding. There is no legal bar to running a nonprofit just like Strasburg, relying strictly on funds from operations to fund operations.

OK, yes, if you are a 501(c)3--which is a tax status--as well as a not-for-profit--which is a form of incorporation--other differences come into play, and you start to learn acronyms like UBIT.

But philosophically, a business like a heritage railroad could be organized either as a not for profit or as a for profit and run in almost exactly the same way. That the two types of organizations are often run differently is more a cultural than a strictly legal issue.
Author:  robertjohndavis [ Thu Mar 02, 2006 1:50 pm ]
Post subject:  Excellent point n/m
Excellent point n/m
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