I am feeling a little like Ebenezer Scrooge today so I thought I would raise an objection to tax exempt status for a group of very friendly people who, nevertheless, seem to have no real charitable raison d’etre, and yet have been granted 501(c)(3) status. I’m talking about a delightful little organization called People for Urban Progress. I will say right up front that nobody's getting rich here and there is no secret political slush fund. Its just that some people are having fun doing something worthwhile, just like the folks at Louis Vuitton, Gucci, or Michael Kors, and not paying taxes. This is a complete outrage! According to their Mission description in Part III, question 4a, of the 2016 Form 990:
“People for Urban Progress [PUP] is an Indianapolis-based 501c3 non-profit organization that advances connectivity, environmental awareness, and good design, rescues discarded materials, redesigning them for public benefit. These locally-designed goods fund projects and big ideas that improve indianopolis’ urban spaces. Simply put, we make goods for Indy’s Good. We turn useless into useful. We’re the not-for-profit that turned the RCA Dome roof into wallets, messenger bags and shade structures. We turned bush stadium seats into bus stops. We fund projects and ideas that enhance the city’s quality of life, connectedness and design culture.
In other words, PUP gathers up old leather from public and private companies and uses the materials to create handbags and stuff. Then they sell that stuff via their website at regular retail prices. Bravo and humbug, I say! But most prominent on PUP’s website is its catalog of handbags, wallets, sports bags, totes, and bookbags, all made from recycled leather from Amtrack train seats. Here is a picture of some their very fine products:
As far as tax exemption, "Bah Humbug!" Here is how PUP describes its start-up:
Sometimes, a great idea takes time to become a reality. Sometimes, you just say yes and figure out the rest. Sometimes it really works and turns out better than you ever imagined. That’s what I like to think happened when we said yes to Amtrak earlier this year. This one is a long time coming. Years ago, a fan of PUP happened to be working with Amtrak and started mentioning our name and our work in reuse. In early 2017, we were sent a wool train seat cover to prototype into a bag. The conversation resurfaced this year and we made friends with Kara from Amtrak’s Office of Sustainability. She was asking how we could collaborate as they updated 100 train cars from the Acela Express. The Acela Express line featured leather seat covers. We’ve been wanting to work with leather for a while now and this seemed like a great opportunity to collaborate with a company that was just as dedicated to transit, sustainability and connectivity as PUP.
This is the start of something new, this is an opportunity for PUP’s greater work to reach a national audience. We have a chance to prove to the whole world that material reuse can be practical, well designed, socially responsible and beautiful. We said yes, we took our first delivery of material, figured it out and here we are. It’s what we do - ta da - used into usable!
I’d like to say this was an easy process and as straightforward as I just made it sound, but, that’s just not the case. This was a tough one. We received the seats, and they were dirty. Like, they had seen some gum, some coffee and a few ice cream sandwiches. We had to clean these babies before we could start. We tried all kinds of things and finally settled on dry cleaning them with a company that uses an eco-friendly process. Once they were cleaned, we unleashed our designers. They prototyped and prototyped and prototyped. I’ve been amazed by the creativity and ingenuity of our team. They took bits and pieces of leather and transformed them. The results are beautifully designed bags meant to take your next journey to a whole new level.
Over the next 10-12 months, we are on track to create approximately 2,500 bags that will roll out in small-batch releases of 150 as we repurpose the seat coverings. Products in our Amtrak Collection retail from $75 to $750 dollars. We expect to release more new designs during that time, as well, so stay tuned and we’ll let you know when the next train (or product) arrives at the station. Our hope is that you’re just as excited about this new product launch as we are! We look forward to seeing where this takes us!
PUP is creating a smarter, more sustainable and more resilient world by combining good design with existing resources. For us, it’s important to show the public that things can have a life beyond their original purpose. This project serves as an example for how that can be done in a sophisticated and innovative way.
The bags sell for what seem like the same prices you can buy bags at moderate to high end stores that sell handbags and such. Some bags are kinda pricey. Like the “Agent Backpack” which sells for $385.00 or another Amtrack leather bag that’ll run you $750. Granted this is a small organization with gross receipts of slightly less than $300,000 and net assets of about $70,000. The currently reported gross receipts are slightly higher than during the receipts in annual periods from 2012 (gross receipts of $151,000) to 2016 (gross receipts of $197,020). Still, it’s Christmas, and well . . . dammit people can’t just stop working to run a nonprofit with no charitable goal! According to their 2016 Form 990, the only two compensated employees are husband and wife who, together earn about $50,000. So no, nobody is getting rich . . . but still! Here is what Amtrack said in its press release when it announced that the PUP will start marketing handbags made from old Amtrack leather:
(October 16, 2018 – INDIANAPOLIS, Ind) – People for Urban Progress (PUP), an Indianapolis-based nonprofit specializing in advancing good design and civic sustainability, announced today a partnership with Amtrak to repurpose leather seat covers from 20 refreshed Amtrak Acela Express train sets and save those materials from landfills by transforming them into luxury bags. The partnership is a direct result of how both companies fully embrace sustainability as a fundamental part of their businesses. This landmark project is PUP’s first national endeavor, and a new initiative for Amtrak as well.
The limited-edition launch of the Amtrak Collection includes handmade accessories from Amtrak’s flagship Acela Express. The first launch of the slate blue luxury leather bags includes totes, backpacks and dopp kit. Approximately 2,500 bags are expected to roll out in small-batch releases during the next 10 to 12 months as the seat coverings are repurposed. All designs are developed and hand-made by the designers at PUP, who also developed the process of repurposing the seats. This includes separating the leather from the foam seat, dry cleaning the leather utilizing an environmentally friendly process and then cutting the leather and sewing it together to create each product.
“This is an exciting opportunity to showcase the work we do to remake waste and create change through the creation of our products,” said Andrea Cowley, Executive Director at People for Urban Progress. “Collaborations like this allow us to continue to advance the idea of taking careful consideration of how we recycle our cities’ resources. We make the used into useful through great design which, in turn, allows us to address civic sustainability.”
“One of the main objectives of this Upcycling Project is to divert as much waste from landfills as possible,” said Senior Sustainability Manager Kara Angotti. “We have set a corporate recycling target of 20 percent by 2020 and this project will help us advance closer to achieving that goal. This is a unique opportunity to explore the extended value in our trash and to focus on ensuring we consider what happens to our materials at the end of their useful life.”
Amtrak’s Acela Express service, best known for transporting business commuters is a high-speed train operating between Washington D.C. and Boston with stops in Baltimore, Philadelphia, New York City, Providence and more. Amtrak is refreshing the interiors of its current Acela trainsets before the next-generation Acela fleet becomes active in 2021. These seat materials from the current Acelatrainsets, which are being donated, were retired after approximately 10 years of service.
PUP is known for repurposing dated infrastructure through design and fabrication projects. In 2008, they upcycled the roof of the RCA Dome, previously the home of the Indianapolis Colts. Materials from the dome were used to design wallets, handbags, office bins and more, saving 13 acres’ worth of material from the landfill. Promotional banners and materials from Gen Con, the longest running gaming convention in the world, were fashioned into messenger bags and wallets. Baseball stadium seats were transformed into bus stops and public seating around the city of Indianapolis, still giving residents something to cheer about. The Amtrak collaboration offers a unique national opportunity to expand PUP’s mission and vision.
The full line of the Amtrak Collection will retail between $75 to $750 dollars. In addition to the new Amtrak collection, PUP sells a variety of bags and wallets made from arena roofing materials, event banners, reclaimed seatbelts and more, ranging in price between $12 and $172.
Ok, so in that press release is perhaps a slight hook. The press release states that PUP seeks to “divert as much waste from landfills as possible.” I suppose that could be a charitable purpose, something that helps the environment and lessens the burden of government. But even if those are charitable goals, they seem minimal relative to the selling of leather totes and such, particularly at high end prices and as seemingly the primary activity (according to the website). At a minimum, the regular and continuous sales of “luxury leather bags” is a substantial non-exempt activity and we all know what Better Business Bureau says about that! "[T]he presence of a single non-[exempt] purpose, if substantial in nature, will destroy the exemption regardless of the number or importance of truly [charitable] purposes." The revenue from that activity is UBIT, at best, and a complete disqualifier at worst.
Now everybody get back to work. This ain't Christmas!
November 29, 2018 in In the News | Permalink
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