Scott's Views

Two important events that impact our future occurred in the first Quarter of 2007:

The Good: In a strange twist of logic, the IRS is actually the GOOD in our story because they have approved Coolstreams (including Music Sojourn) as a Tax Exempt public charity under IRS section 501(c)(3). That means that YOU now may be able to claim your donations AND Membership fees to Coolstreams as a tax deduction! >>>

The BAD: Well, the weather has been fairly lousy throughout much of the U.S. this winter & spring. While that has not affected us too much, there is, unfortunately, ...

The Ugly: At almost the same time as we received the GOOD news above (early March, 2007), the Copyright royalty board decided on new internet radio (webcasting) royalties. A combination of onerous new per song rates and per stream minimums have caused a new uproar in the internet radio industry, with most independent outlets claiming that the new rates will exceed their total incomes, some claiming by 25% to 50% above their total revenues. Rather than try to rewrite what many others have covered well elsewhere, I will include some additional reading links for you below.

Many of the larger players (including National Public Radio) are currently preparing appeals to try to have these rates adjusted or repealed. This will play out over the month of April and possibly into May & June, 2007. For now, WE must assume the WORST CASE (meaning that the current rates prevail without amendment).

As a small specialty webcaster, the worst case WILL impact us badly also. While we are still not certain of the total impact (as some aspects of the decision still need some interpretation), we are pretty certain that this will cause us to make changes in our programming going forward in order to survive.

Specifically, any areas of Coolstreams' programming that are not well supported by Memberships and Donations will probably need to be discontinued due to these new minimum royalties.

We hate to drop ANY programming that we have already identified and produced as an area supporting our mission, but lack of enough support to at least cover the new minimum royalty rates to stream them will leave us with no alternative.

This is the time to show your financial support for the specific programs that you enjoy and use on Coolstreams. It may be too late by May or June!

Click here to support us with your Memberships and Donations >>>

People say yes to our programming. It is time to say yes to supporting us financially!

If you are not a Member, please say yes to our reasonable Membership options now. If you are a current Member, please say yes to an extra donation. Either way, your Membership or donation (or both) can be tax deductible for you, and you can also say yes to some great music premiums from our Member Premiums section!

On our Member's sign-up form, you can select one or more programs that you wish to support and help keep alive on Coolstreams. Your selections on our form is critically important, and just about the only way that we will know which areas we can keep alive if we are forced to that decision.

Thank you for reading and for caring!

Click here to support us with your Memberships and Donations >>>

Special note for performing artists:

If you are an independent artist that is receiving airplay on one or more of our programs, please also consider either a small donation, or a donation of some extra CDs that we can offer as Member Premium incentives. Either your donation or the value of your donated CDs is also a tax deductible contribution for you!

Click here to support us with your Memberships and Donations >>>

Here are some good links to read more about these issues (all open in a new window):

• Live365.com answers Sound
  Exchanges letter to it's members >>>


• DiMA Requests Judges Reconsider Major Flaws in
  Internet Radio Royalty Decision >>>


• Will the RIAA kill net radio? (The Register) >>>


• New Royalties Threaten Internet Radio
  (DIMA) >>>
  
  

Click here to support us with your Memberships and Donations >>>

Labels: 501(c)(3), charity, donations, internet radio, membership payments, memberships, non-profit, royalties, tax deductions

We have created a FAQ page to answer questions about Coolstreams' Tax-Exempt / Public Charity Status, including explanations of what portions of Membership payments and Donations are tax deductible. You can find the FAQ, plus a link to see a copy of our determination letter from the IRS, at:

Coolstreams Non-Profit FAQ >>>

Please consider an extra tax-deductible donation to support us - see our Donations page at this link:
Support Our ongoing Fundraising Campaign >>>

Why this took so long:

As many long term listeners know, we have been working on obtaining Non-Profit status for over 3 years. While there was a backlog at the IRS that added some time (we submitted our application in May, 2006), the bulk of the delay came about as a result of consulting too many "experts." Here's a quick summary:

Back in 2002-2003, when first planning this change, we were advised to seek legal assistance because we did not originally incorporate as a non-profit (making the application more complicated). With very limited financial resources, we sought pro-bono legal assistance from a local Volunteers For The Arts service. The first independent lawyer assisting us felt such an application would be difficult, but possible. We incorporated as a non-profit in February, 2004, and began to set up the Non-profit company. Before we were ready to complete the Exempt application, this Lawyer retired. We requested another Lawyer through the same service. This took another 5 months to obtain. One of the largest law firms in our area offered the services of two people on their staff (a lawyer and assistant). We forwarded all information immediately. 3 months later, they requested more information. About 3 more months later, the Lawyer informed us that the application was essentially hopeless and would almost certainly never be approved, complete with a multi-paged explanation with dozens of reasons detailing why not. We discussed this and explained more for about 2 weeks, then decided to try again (as frustrating as that seemed at the time, the most significant overall impact was that it wasted almost 9 months of valuable time).

Our Board of Directors then reluctantly approved taking a loan to hire a Lawyer to work on completing the application. We interviewed several Lawyers who felt it could be accomplished, but the cost typically quoted was near one full year of our revenues. Spending more than you earn is a difficult decision anytime, but worse when you have been advised that it may be fruitless anyway.

In January, 2006, we decided to try to use the power of the Internet to assist us. We researched as much as we could about similar organizations who achieved tax exempt status, found examples of ways to improve our corporate documents and required policies, and then decided to make an attempt to file the application on our own. We researched other Organizations' applications, found and learned from both those who were successful and who made mistakes, and incorporated these ideas into how we structured our application. We completed all of this and filed the application in 4 months from the start (May, 2006). In January 2007, we received a reply from the IRS with a 4 page list of questions. While a large list of questions is a bit intimidating, the majority of the questions were ones that we were very comfortable in answering. We replied within 3 weeks, received a few more follow up questions, answered those quickly, and received approval of our application on March 9, 2007. I should also add that the IRS agent reviewing our application was very clear and straightforward with what information he was looking for, and that made our ability to answer these inquiries much easier than we might have expected (based on all that prior advice).

The primary point here is that we believed in (and fully understood) our mission and motives, while the outsiders apparently did not. It's hard to predict how it would have gone had we skipped the pain and delays of consulting the experts in between, perhaps those experiences helped us prepare a better case and be more determined to see the process through. But we do regret the delays in accomplishing our objectives, and the resulting impact on developing our service and mission.

One other good outcome, as I mentioned in the prior post, is that we accomplished this without spending excessive Membership funds (both present and future) on the process.

We are also not bashing Lawyers here either (even to the large firm that employed the Lawyer who told us to give up, we at least appreciate their initial interest in assisting us). We know some nice Lawyers. We just didn't know one who could assist us with these specific issues.

However, we are always looking for assistance in any area. If you are a fan/supporter of our efforts and have a specific skill or knowledge that you can help us with occasionally, please let us know. Use our Members tab for the links to get in touch with us, and we'll be forever thankful!

Thanks to all of our members and supporters for your patience during this process, and most of all, for your continued support of our efforts!

Labels: 501(c)(3), donations, membership payments, memberships, tax deductions, volunteering

I am pleased to (finally) be able to announce that Coolstreams has been approved as a Tax Exempt public charity under IRS section 501(c)(3). To those of you who supported us in 2005, 2006 or 2007, you may be able to claim your donations AND Membership fees as a tax deduction (See our Tax Deduction FAQ >>>, or consult your tax advisor or tax software). Thanks to our board of directors who spent many collective hours working on the application process, answering many questions, and putting together the replies to accomplish this. We will post more details, including a copy of our notice, as soon as we can.

I am also pleased to announce that we accomplished this WITHOUT significant use of your Membership fees or donations. Other than the $500 filing fee and about $200 in office supplies, postage, copying, etc., we managed to complete the entire process without incurring expensive legal fees or other significant costs. Thus, we are able to continue to put your Membership contributions and donations where you would want us to - into further developing the programing and content.

Thank you again to a few who have made extra contributions to our campaign - if you have not yet done so, and would like to make a tax deductible contribution to our efforts, see the section immediately below (or above) and follow the link from there, or click on the Members Tab on our main site.

Labels: 501(c)(3), charity, donations, membership payments, memberships, non-profit, tax deductions