A topic I've run into with other non-profits with which I've worked:

As much as we may want our non-profits to be all volunteer and all fun, it just doesn't work that way. Many of our groups need paid directors, technical help, or other staff in order to properly function.

One syndrome I'm starting to run into in non-rail groups is supposed "volunteers" that are actually paid a minor wage or fee in order to be dependably, reliably present in order to do functions that otherwise couldn't reliably happen. Examples I've seen include a semi-retired or flexibly-scheduled CDL holder that drives a food truck for a food bank program, and local residents that show up at another food bank program to help unload trucks and/or load the coolers (because most of the other volunteers are older and/or in no shape whatsoever to lift heavy boxes or operate a pallet jack). As near as I can tell, these guys are paid "under the table" from proceeds from donations, including donations solicited specifically towards such expenses, and they are paid not much more than minimum wage or the like. I talked with one of the guys running said program, and he said "it's the only way we can be sure to have enough warm bodies on hand to get things done. Otherwise, we'd have days when too many people show up and days when no one shows up. It can create a bit of friction with people who don't get paid, but until we have to turn away strong bodies every day, it's what we have to do to keep it operating."

This could be applicable to heritage rail operations as well--and for all we know it's already happening. A place could be paying or bribing a qualified engineer or stationmaster to be on hand that weekend of the "big game" or local railfan event. I've also seen or heard of some cases of volunteers "paid" in meals and/or overnight lodging to stay a three- or four-day weekend for a project. I have to wonder how some operations manage to operate around Thanksgiving or Easter--I swung by the Illinois Railway Museum on Easter Sunday because it was literally the only day I could get there during my Midwestern junket, and a least a few visitors that day were conspicuously Jewish......

Comments? Is this happening? Should it happen? Should it NOT happen, in some people's opinions? Is this in our future?

I remember being told (and actually benefiting from it) that a railroad that my grandparents volunenteered at would "bribe" trainmen with baseball tickets if they volunteered for the Day Out With Thomas events. Don't know if they still do that, but I'd say it was a nice trade.

For many years, an operation I worked for had volunteers, who were compensated for showing up (to an operation hours from anywhere) by paying a per diem (based on position) and mileage. This worked to make it affordable to travel to their location and work (12 hours days). On the face it sounded expensive, for not nearly as expensive as the full paid employee program that followed it.

I think there should be no problem with offering a "honorarium" or other flat reward to members, especially those with essential skills (that CDL food truck driver). Whatever a group does, they should keep expenses tracked and aboveboard--such controls will save the management a lot of grief later.

Michael Seitz
Missoula MT

There are issues with paying people. Probably the two largest are:

[1] The first is that it now makes then technically an employee, and thus the issues of workers comp payments, payroll taxes, employee liability, employee reporting, safety programs, etc. This is not a small issue as some states are even going after baby sitters and people doing lawn mowing, and making those who hire them make these payments.

The concept of employer-employee has become a major issue in many industries. A good transportation example is a lumper, someone hired by a truck driver to help load or unload a truck. These are often just local friends or people available, but drivers and their companies have been sued over the practice when workers comp and other taxes aren't paid or reported.

For a railroad museum or tourist operation, all it would take is one upset person to report it to the government, and it would become a major legal concern. If someone is paid, there had better be a reported record.

There is also the liability issue. Being paid, the museum/tourist railroad now has all of the legal safety requirements of any company. A good attorney would own a museum if someone being paid under the table was hurt.

[2] The second issue is who gets paid. This needs to be clearly covered by a policy. If not, then there can be issues of showing favoritism. There is also the issue of people saying "well, if they get paid, I'm not coming if I don't get paid." A policy that applies to everyone is more fair. For example, anyone who works the Santa train for the weekend gets 4 family tickets they can give to friends.

However, paying for specific talent can be justified. For example, a welder who brings his own equipment might be paid some for the use of their equipment. However, again, there needs to be a policy that establishes a procedure and practice.

Volunteers bring their time, talent and treasure to the organizations with which they choose to affiliate. Their contributions range from "casual" to "vital" based upon their commitment and skill to the mission of their chosen organization.

Over the past 14 years, I have been affiliated with an all-volunteer organization (IRS Sec. 501c3) that renders emergency medical services in a rural area with an aging population (increasing medical needs) served by a similarly aging volunteer pool (i.e., decreasing in numbers and individual capacities).

We saw the trend coming and have worked with our county supervisors to supplement our volunteers with a few paid county-employed EMS providers. We coordinate our work, often working together for the sake of the community.

What we need from our volunteers here is their time and their talent. We do not need their treasure, as we are supported by donations from the community. We DO REIMBURSE the volunteers for their expenses for training, mileage, and other direct approved expenses.

We DO NOT pay wages, nor do we foresee doing so. We continue to adapt in the transition from what recently was an all-volunteer EMS in our area, to a mixed volunteer/county-employed EMS. The community benefits from the commitment of the volunteers to a significant degree.

In our experience, clarity of mission, commitment, and mutual respect among all involved is critical. Further, we actively work to explain things and prevent conduct that risks alienation of our volunteers and/or the neighbors we serve.

If any part of this is useful in your situation, feel free to take what you want, and just leave the rest behind!

At a museum I had been with for many years, we had one member who was paid a small stipend to handle things like the daily mail run, banking, ensuring the cash box was ready, etc. It was not a huge amount of money, but helped ensure that this work was done on a daily basis. Not sure how a stipend compares with a small salary, with holding and such, but it worked well and there was no friction that I recall. It was voted on each year by the board.

For weekday operations during July and August we did have a paid crew, again to ensure people were there every day. This worked well and the paid crew were usually members who had the summers off. It was a perk of membership really to be part of the paid summer crew especially with our teen members. Otherwise weekends were all volunteer staffed. Again, this was voted on each year by the board.

Again, seemed to me it was always a friendly mix. If volunteers showed up during those weekdays, the paid staff was there to make sure the shop was open so during the summer so you essentially had working volunteers in the shop 7 days a week. Again, all very positive.

When I volunteered at the steamship Wapama, for the National Park Service, in 1987, they gave me vouchers for the Golden Gate Bridge toll.

Here at Veterantog in Denmark, meals are often provided for us, and laundry for work clothes is provided.

I believe it is possible to reimburse for expenses like travel, food, etc. without incurring liability, tax or otherwise, in many places. I believe you could reimburse for car travel by mileage at IRS rates.

So I think there are ways to provide benefits for regular volunteers without crossing the line to employment.

Are you providing insurance for your volunteers? We insure our volunteers against accidents when volunteering on the property.

I was a member of several community bands in the 90's in Ohio. Some were non-profit others were... well under the table. The fees they collected for performances and parades were divied up at the end of the year and after expenses were paid (gas for the guy who pulled the trailer, music, promotion, copyrights ect.) We got a steak dinner and a check that amounted to about $3 per gig. One year I actually got around $80. The check was called a mileage reimbursement, how this worked with the feds I have no idea.

I know one group who does pay it's Santa's a token fee for the Santa Runs and pays them as actors or independent contractors performing a service.

I really, really would avoid paying volunteers with anything that is not de minimus or status based.

The reason is the the definition of "Unrelated Business Income". If you are running a bake sale or anything that is unrelated to your exempt purpose-then you remove one of the best defenses against the finding that your activities are unrelated to your exempt purpose and subject to Unrelated Business Income Tax.

"Volunteer Labor: Any trade or business is excluded in which substantially all the work is performed for the organization without compensation. Some fundraising activities, such as volunteer operated bake sales, may meet this exception."

https://www.irs.gov/charities-non-profi ... me-defined

https://www.irs.gov/charities-non-profi ... exclusions

It is very common for non profits to have paid employees / staff.

Anyone who knows anything about non profit finance knows that external audits by professional CPAs are often required, W2's and/or 1099s have to be issued depending on the amount of money involved, and the related expense(s) and number of W2's / 1099s reported and made available to the public on IRS form 990.

Bob H

At the non-profit theatre where I am employed we occasionally reimburse a volunteer for mileage/travel or other direct expenses etc. if appropriate for a specific task.

At National Capital Trolley Museum, in addition to volunteers we have paid, part-time staff who assist with the education program and who work in our museum store. We are also looking at the need to pay for bookkeeping services when our current volunteer treasurer retires.

Wesley

At the non-profit theatre where I am employed we occasionally reimburse a volunteer for mileage/travel or other direct expenses etc. if appropriate for a specific task.


As long as it is reimbursement for expenses incurred for something done on behalf of the organization and you are paying no more than the IRS rate and all other expenses are documented and reasonable-no problem-that's not compensation, so no 1099's are required.

One potential pitfall is that you can obtain a 14 cent/per mile (it's ridiculously low because its not indexed) charitable deduction if you itemize for miles traveled to/from volunteer activities-so clear records need to be kept to ensure that the volunteer doesn't "double dip" on the reimbursed miles by also claiming them as an itemized deduction.

W-2's and 1099's are NOT part of the 990-(nor should they be-too much personal info-especially now that Equifax kindly shared so much information.) only the name of the recipient and the amount of compensation is shown in Part VII on the 990.

You can certainly reimburse fuel and oil, mileage, and tolls, because IRS already recognizes these things as charitable donations.

I don't see a problem with serving or providing lunch; reimbursing lunch gets a little more slippery as lunch is not normally tax deductible unless you stay overnight.

Other than stuff like that, there's no "paying them a little". Either you are out, or you are in, whole hog, with all the requirements of hiring an employee, not least, minimum wage, unemployment etc. There is no paying them $5/hr because if they ever become disgruntled, they will flip that around on you hard. Or you can farm this out to a "temp" firm, for a great deal more than minimum wage.

Also beware paying a volunteer commission, a fraction of sales, or other performance based incentive. The Form 990 specifically asks about this, which means Watch Out! Sometimes IRS asks questions like this merely to collect demographic data. But often it is a "gotcha" question, such as the political campaign question. Have your nonprofit tax lawyer review this.