Query prompted by a social-media "advertisement" just seen for an "all-volunteer" preservation line:

Have any of your operations that were formerly "all-volunteer" had to resort in the past year to offering hourly/daily pay to fill certain positions regularly, such as ticket agent, engine crew, gift shop personnel, etc.?

And how has this affected your bottom line?

(By "all-volunteer," of course, we make exceptions for the likes of a paid general manager/administrator, food concession staff, weekly cleaning, etc., and we are not counting professional outfits like Strasburg, Durango & Silverton, Grand Canyon, etc.)

The "announcement" in question was posted by an operation that has been reputed to have had problems finding/keeping volunteers for alleged reasons I won't go into here.

I could have sworn that that operation has had the paid part-time agents for a while now, and that it's not new...

Not casting aspersions, but in the past month or less (I'm actually inclined to say "week"), this operation had a Facebook post touting its "all-volunteer" status.................

Please don't say who here. I can think of half a dozen off hand who are a bit confused about the definition of 'volunteer', especially when it comes to taxes, wage and hour laws, workmans' comp, employer-paid pro bono time, and those other bothers which get in the way of running the trains.

I once found myself dealing with a for-profit short line with somewhere between no and very little freight revenue which used railfan volunteers (most of whom believed they were volunteering at a not-for profit) to run both its tourist train and the occasional freight.

The worst example I can think of is a national educational not-for-profit which claims that it has several thousand volunteers to provide its services but when you pull up the 990 there are four or five paid employees, no volunteers, and no money spent on volunteers.

Word of caution.

If your enterprise is a tax exempt charity (i.e, a 501(c)(3)), before paying "staffers", you need to check with your tax advisor to see if the nature and extent of compensation program and what the staffers are doing will trigger and Unrelated Business Income Tax (UBIT) liability.

As a reminder, all tax exempt charities have an exempt purpose, which means that your income must be GENERATED within its confines (you don't get to run a widget factory and claim all profits are devoted to the Foundation for Noble purposes). However, there is a bit of a loophole, in that if an activity utilizes volunteers, the activity isn't subject to UBIT.

See examples 1 and 2 on page 9 of IRS Publication 598.

https://www.irs.gov/pub/irs-pdf/p598.pdf

Another example: In Pennsylvania, Volunteer Fire Departments routinely hold chicken barbeques to raise money. Now obviously, that's not in an exempt purpose that would encompass providing emergency, fire and rescue services. However, since the staffing is done by company members, it's not a problem.

The purpose of these somewhat unclear rules is to not to carve out competition to ordinary taxable entities. If you were allowed to run a chicken stand and claim exemption from tax, you can bet Popeyes and KFC would be screaming about "unfair competition". The reason is volunteer staffing "sanitizes" the unrelated activity is that utilizing volunteers puts practical limits the ability to maintain the activity as a "regularly carried on trade or business".

The above is provided for general education and discussion and is not intended; nor should it be construed as accounting, business or tax advice. Individual circumstances may create exceptions to the rules; and you should solicit advice from an appropriately licensed individual concerning your particular situation.

The takeaway?

Talk to a professional.

I suspect that ours is not the only museum that thinks of itself as "all volunteer" because all train operation and equipment/track maintenance is done by volunteers. Paid staff do administration, sell tickets, operate a snack bar, and operate a gift shop. We couldn't function without the paid staff, yet the visitor experience of both displayed equipment and of train rides is the product of volunteer labor.

I have also worked with non-profit "all-volunteer" outfits that have had to resort to paying me and/or others "under the table" to guarantee either the sheer muscle to be there when a truck or two of food showed up at the food pantry from the warehouses (as in, all the volunteers were young and weakling, elderly, and/or disabled and couldn't be trusted with a toy wagon, let alone a pallet jack and a one-ton pallet of potatoes or whatever), or the technical expertise (to run computer programs, run radio equipment, fix things, whatever) would be on hand at designated times. The pay (something on the order of minimum wage or even less, plus benefits like a bag of food or pizzas for the crew) was the difference, in my case and others, between "I'll show up if I feel like it and have nothing else better to do" and "You can count on me, just call me a half hour before the truck shows up, and I can scram when the truck's unloaded and stuff put away...."
Another time, they had to pay a truck driver with a CDL to drive the truck to and from the warehouses while the regular driver was laid up after arm surgery. And they got another driver to bring some loads by paying him for fuel for his use of his personal truck.

The problematic situation arose when you had a flock of volunteers who are donating out of the goodness of their heart seeing someone getting paid--which is why we were ordered to keep mum about the pay. (They took us back into the cooler or the truck to pay us out of sight.)

I have no problem, philosophically, with paying for "work" if that's what's necessary to "make things happen" dependably and predictably, as they say. How many of us have shown up at a restaurant, fast-food place, or shop and seen the sign saying "CLOSED due to staffing issues--sorry!" or dramatically adjusted hours? If I drive or detour out of my way to see or ride an advertised excursion, and find it cancelled because of lack of a qualified engineer or the like, there's only so far my sympathy will go.