Gratitude to ASQ 501(c)(3) membership association for Certifications as Related Exempt Function Revenue

Gratitude to ASQ 501(c)(3) membership association for Certifications as Related Exempt Function Revenue

Posted by Daniel Zrymiak on Dec 13, 2019 11:09 am

This is a message I hope that will be reviewed and taken under advisement very carefully.  This should help to clarify any discussions about income thresholds and tax implications of ASQ's $6M/year Certification portfolio.

As of December 2019, ASQ currently operates as a tax-exempt Membership Association, as a 501 (c)(3) entity.  Based on the publicly available IRS 990 forms submitted by ASQ, there are two conditions that ASQ must fulfill in order to sustain its status as a Tax Exempt Public Charity:

1. ASQ receives more than 33 1/3% of its income from contributions, membership fees, and gross receipts from activities related to its exempt functions.

2. ASQ receives no more than 33 1/3% of its income from gross investment income and unrelated business taxable income.

Any long-term ASQ member who has attained and renewed their ASQ certifications should appreciate the compounded cost savings available to members, along with the incremental advantages that ASQ certifications potentially provide to quality practitioners.  For example, as an ASQ member, I can synchronize my certification renewals for one moderate fixed price every three years.  When compared to the price that a non-member must pay to renew each certification individually, the discounts and savings alone offsets the prices of my annual membership dues.  For this I am especially grateful.   Some ASQ Staff members in particular have been instrumental in their oversight of an efficient and value-enhancing certification renewal process, and I extend my sincere appreciation to her and her dedicated colleagues.

ASQ Certifications have evolved into a stable and constant portfolio, which consistently generates approximately $6M per year in revenues (representing 15% of ASQ's income). ASQ's Certification portfolio also fulfills most of the objectives set out within ASQ's Articles of Incorporation (as referenced in ARTICLE 1 of ASQ's Bylaws, which cannot be revised without a 2/3 majority of a quorum of 2,500 Regular ASQ members).
 

Objectives

The objectives of the Society shall be advancement of the theory and practice of Quality and the allied arts and sciences and maintenance of high professional standing among its members. The Society shall have the following purposes:

1.       (1)  To create, promote, and stimulate interest in the advancement and diffusion of knowledge of the art and science of Quality and its application.

2.       (2)  To promote unity, effectiveness of effort, and ethical professional conduct among those who are devoting themselves to the theory and practice of Quality or the allied arts and sciences.

3.       (3)  To provide, through necessary and convenient facilities, for the holding of conferences, conventions, and other meetings of its members for the exchange of ideas and experiences in the development, application, and use of Quality principles and the allied arts and sciences.

4.       (4)  To publish and distribute books, pamphlets, periodicals, literature, and other printed matter devoted to the theory and practice of Quality and the allied arts and sciences.

5.       (5)  To make available to journals, newspapers, and other channels of public information reliable communications and other information concerning Quality and the allied arts and sciences.

6.       (6)  To engage in any other activities which are not or shall not be inconsistent with, contrary to, or prohibited by law, necessary and convenient for the purpose of performing, carrying out, promoting, or accomplishing the Society objectives.

What is especially important to understand, appreciate, and extend gratitude for, is the fact that from 2013-2017, ASQ has reported Certifications income as Related Exempt Function Revenue.  This designation is important because it demonstrated (and IRS accepted) that Certification revenues were consistent with ASQ's core purposes as a tax exempt membership association.

As a legend for Business Codes:
541800: Advertising and Related Services (Unrelated Business Income)
611600: Other School and Instruction (Related Exempt Function Revenue)
900099: Exempt Activity (Related Exempt Function Revenue)
 

IRS 990 Revenue Summary
	CODE	REVENUE	2013	2015	2016	2017
TRAINING	611600	Related Exempt	12.6M	13.8M	13,0M	12.3M
MEMBERSHIP	900099	Related Exempt	11.1M	11.3M	11.6M	11.2M
CERTIFICATION	900099	Related Exempt	5.7M	6.1M	5.8M	6.0M
ROYALTIES LICENSING	900099	Related Exempt	1.7M	1.8M	2.4M	4.3M
ADVERTISING	541800	Unrelated Business Activity	0.8M	0.8M	0.9M	0.7M