Exploring System of Recreation: Sectors & Ownership Forms

1. Recreation Systems

2. The 3 Sectors Commercial Public Nonprofit

3. Commercial Sector • 3 basic forms: • Sole proprietor • Partnerships • Corporations • Franchises

4. Sole Proprietor • One owner • Unlimited liability • Personally held liable for any debt or legal problems • Can lose an unlimited amount of money • Sue business & owner • Advantages & disadvantages….

5. Sole Proprietorship

6. Partnership Two or more entities Least popular form of ownership Have written agreement of each owners’ responsibilities 4 types of partners….

7. 4 forms of Partnerships • 1. General Partnership • Common form of partnership • Each partner is fully responsible for liabilities • Share the costs & benefits of the business

8. 4 forms of Partnerships • 2. Limited Partnership • Also, very common • One or more partners can be limited • One partner must not be a limited partner, but GP • Limited partner has limited authority • Liability based on amount of capital invested • Names of limited partners not in name

9. 4 forms of Partnerships • 3. Secret partner • Identity of an owner is unknown to the public • Negative business history • Simply doesn’t want to be known • Secret partner can participate in management but has limited financial responsibility based on investment

10. 4 forms of Partnerships • 4. Dormant partner (silent partner) • Invests only money • Not involved in management of the organization • Liable only for the amount of his/her investment

11. LLC & LLP • Mix of partnerships & company • Owners are called members rather than shareholders • Taxed as a partnership • (as income for individual) • Has limited liability of a company • Easier to form than C or S Corp • Dissolves when a member dies or wants out

12. Partnership

13. Corporations • C Corporations • S Corporations • Franchises

14. C Corporations • Seen as a fictional, legal person & can…. • Own, manage, & sell property • Sign binding contracts • Sue & be sued • Pay corporation taxes • 20% of all businesses & 80% of ave. annual sales • Owners are shareholders • Limited liability up to amt of investment • Run by a board of directors representing the shareholders

15. S Corporations • S Corporations • Like C Corporation in formation • Distributes all profits so that the corporation isn’t taxed • Shareholders are taxed since they get the profits • Only form if ALL profits are distributed • $2 million in profits made, $1 million reinvested, taxed on $2 million

16. Corporations

17. Franchises • Method of doing business, not ownership • 1 co. grants another business right & license • 3 Forms • Trade name • True Value; Western Auto • Product distribution • License to distribute product name, car dealers • Pure Franchise • Complete business format • Products, name, physical plant, marketing • Restaurants, Discovery Zone, hotels

18. Franchise

19. Public Sector Where do you find public sector parks & recreation agencies?

20. Public Sector • Tax supported • 3 types • Federal Agencies • State Agencies • Local Agencies

21. Local Parks & Recreation • Municipalities • Cities, townships, counties, boroughs • Budget from the city…what source? • Guided by several laws….

22. Local Parks & Recreation • Enabling laws • State enables local gvts to acquire, develop, maintain rec areas • Set parameters on: • What types of gvts can operate rec agencies • Authority of agency • Fiscal practices • Governing board • Operational authority • Enables & not mandates

23. Local Parks & Recreation • Home Rule Legislation • Allows local gvts to control issues at local level without state interference • Power to buy, sell, lease property • Levy higher sales taxes • Utilize intergovernmental agreements • Change structure of government • Economic development practices

24. ????? What is the difference between a parks & recreation department and a parks & recreation district? Strengths & weaknesses of each?

25. Local Parks & Recreation • Special District laws • Independent governing bodies • Direct taxing & bonding ability • 20% of the 31,555 special districts in US relate to natural resources • 9 states over 1000 special districts • IL leads with 2,920….

26. IL Special Districts • Housing and Community Dev. • Libraries • Drainage and Flood Control • Irrigation, Water Conservation • Parks and Recreation • Sewerage • Water Supply • Utilities Other Than Water • Cemeteries • Sewage and Water Supply • Counties • Municipalities • Townships • School Districts • Special Rec Districts • Fire Protection • Highways • Health • Hospitals

27. State Agencies • Est. thru state legislation • State parks & forests • State budget allocations • Focus: • Outdoor rec, resource mgt, arts, tourism • IL Arts Council, IL Bureau of Tourism

28. Federal Agencies • Authority from congress • Fed p & r agency focus: • Natural resources management • Welfare of the people • Budget from congress • NPS, BLM, Historical & Cultural sites, VA, MWR

29. Nonprofit Sector What are some characteristics of nonprofit organizations?

30. Nonprofit Agencies Formally constituted for public benefit Funded through fees, charges, donations & grants Private as opposed to governmental (NGO’s) Not profit distributing, but can make a profit Self-governing - boards

31. Nonprofit Agencies • Federal, sales & property tax exempt • “Unrelated business income taxes” • Special postage rates • Not all donations to npo are tax exempt • Exempt from labor unions • Nonprofit Corporation…board liability • Types of nonprofits….

32. Nonprofit Agencies * 20+ nonprofit categories in the IRS code

33. Sector issues

34. Nonprofit Issues • Where do the three sectors get their funding? • What do they do with profits?

36. Where do the profits go? • Commercial • Owners, shareholders • NPO • Back into agency • Public • Into agency or back to city