When you sell a subscription of periodicals separately from membership, the price is usually set higher than the one that includes membership. The reasoning for this is that generally we give more benefits to members or to attract more people to become members. The question is how do we calculate the journal income with these two different price tags for Form 990 and 990-T.
To give you more detailed view of this situation, let me set up an imaginary membership association, called National Caffeinators Association.
Membership and Benefits: The membership is offered to coffee shop owners at $100.00 per year, and its membership benefits include a one-year subscription of quarterly journal, Coffees R Us. The quarterly journal gives you the newest information about roasting, brewing, and serving coffee.
Price Structure and Sale: If a member opted not to receive journals, the member pays $50.00 instead of $100. The journal subscription for sale is separate from the membership at the organization’s website, Amazon.com, and many bookstores at $60.00. The Association had 1,000 members in 2011 and 400 of these members elected not to receive the journals. The Association sold 300 subscriptions separately from the membership in 2011.
Journal Publication Cost: The publication cost of the quarterly journal is about 40% of the association’s cost including publication cost and other exempt activities cost.
Can you calculate the 2011 income from the sale of journal subscription?