What are "commercial goods and services?"

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jonbird
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What are "commercial goods and services?"

Postby jonbird » Mon Aug 19, 2013 3:10 am

What is the definition of "commercial goods or services" for the purposes of this policy?

Examples of fund-raising activities that are not approved include:

1. Activities that would be taxable.
2. Activities completed with paid labor, either by employees or by contract.
3. Entertainment for which the stake or ward pays performers for their services, when admission is charged, and when the intent of the activity is to raise funds.
4. The sale of commercial goods or services, including food storage items.
5. Games of chance, such as raffles, lotteries, and bingo.


The most common definition of "commercial goods" I know is goods used for a business purpose. The only example of a "commercial good" given is "food storage items." Given the common definition, and without any context, that would mean a prohibition against the sale of refrigeration units to business customers. However since this is an LDS context we can presume that "food storage items" refers to goods purchased as part of the LDS family's year supply of household food storage. This does not help to clarify things unfortunately because again, in the common business vernacular, goods like food storage items used for household purposes are "household goods" which is the opposite of "commercial goods."

Another possible definition for "commercial goods" that I can imagine is a good produced commercially. This would imply that it would be an acceptable fundraiser to sell homemade pies but unacceptable to resell bakery produced pies. This would also prohibit participation in the BSA popcorn sales since that product is produced commercially. The example of "food storage items" is again unhelpful here because while one can procure commercially packaged food storage items it is also a very common practice to acquire commodities and package them for storage oneself which would result in a "household good" even if some of the ingredients were of commercial origin.

There are so many mysteries and contradictions in the official fundraising policy that I could go on for many pages. But if I could choose to have just one sentence illuminated completely than it would be this reference to "commercial goods and services."

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aebrown
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Re: What are "commercial goods and services?"

Postby aebrown » Mon Aug 19, 2013 8:17 am

I don't see how your first definition applies in this context at all, since hardly any potential buyers would be interested in those kinds of goods. The second definition is clearly what is meant by "commercial goods and services." The Church wants to make sure that we are not selling a product that is available for sale by any other vendor. So your example of pies illustrates the issue very well.

Yes, this would exclude BSA popcorn sales; just because BSA sanctions an activity doesn't mean that the Church allows it. And yes, I'm familiar with the letters that circulated about a decade ago claiming that BSA popcorn sales were allowed, but that argument was weak at the time and it now relies on obsolete handbooks and superseded letters, so that argument is now irrelevant.

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Re: What are "commercial goods and services?"

Postby lajackson » Mon Aug 19, 2013 8:23 am

jonbird wrote:Another possible definition for "commercial goods" that I can imagine is a good produced commercially. This would imply that it would be an acceptable fundraiser to sell homemade pies but unacceptable to resell bakery produced pies. This would also prohibit participation in the BSA popcorn sales since that product is produced commercially.

Answering with my own personal opinion and not in any official capacity, I agree with what you have said here. Locally, we interpret the restriction as a prohibition on buying and reselling anything that can be bought by the members on their own without the middleman. We do not wish to compete with commercial businesses in anything we do.

And while I agree that the homemade pies would be acceptable, be careful not to run up against any local codes relating to food handling and preparation. In some places I have lived, this has not been a problem. In others, you could go to jail for taking a pie to a neighbor as a welcome gift.

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Re: What are "commercial goods and services?"

Postby jonbird » Mon Aug 19, 2013 2:37 pm

aebrown wrote:I don't see how your first definition applies in this context at all, since hardly any potential buyers would be interested in those kinds of goods.


I agree that the first definition is unlikely to be correct but it had to be dealt with since that is the common definition of "commercial goods" used in business and finance.

The second definition is clearly what is meant by "commercial goods and services." The Church wants to make sure that we are not selling a product that is available for sale by any other vendor. So your example of pies illustrates the issue very well.


I think you are actually introducing a third definition and confusing it with my second. If the definition of commercial goods is goods which are for sale elsewhere then the sale of all pies, not just resold bakery pies, would be prohibited because the sale of homemade pies competes directly with the sale of bakery pies. If this is the right definition then really it is a prohibition on the sale of ALL goods and services. If a "commercial good" is a "good which is for sale" then written more plainly the policy would prohibit "the sale of goods or services which are sold" which becomes a circular definition which prohibits the sale of all good and services.

Additionally, another requirement from the same policy is that a fundraiser provide a "meaningful value or service." It is hard to imagine a good which offers a "meaningful value" which is not for sale elsewhere.

And if this third definition is correct then what are we to glean from the awkward example of "food storage items" in this context? I have perhaps a misplaced expectation that the example given would illuminate the policy. Food storage items cannot be bought locally most places in North America but they can be purchased from niche vendors by anyone with access to the internet. Where I live you will not step on the toes of any local commercial interest by selling food storage items.

So perhaps there is a more helpful and specific fourth definition which prohibits "the sale of goods or services in competition with goods or services available locally." It is possible to imagine how this specific policy could result from a specific case in a Utah ward where a fundraiser sold food storage items, which offended another member of a stake or ward whose livelihood was selling similar items. And somehow in gross neglect of their members needs the local leaders allowed this to escalate to the First Presidency and now the entire planet Earth has to live with this prohibition which cripples their youth programs, and only the awkward inclusion of the explicit example of "food storage items" betrays its petty origins and obfuscated intent. The problem with this fourth definition, ignoring whether or not it is reasonable, is that it requires those who wish to implement it to infer critically important elements of the policy which could have easily been made clear but which inexplicably have not been.

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Re: What are "commercial goods and services?"

Postby jonbird » Mon Aug 19, 2013 3:07 pm

lajackson wrote:Answering with my own personal opinion and not in any official capacity, I agree with what you have said here. Locally, we interpret the restriction as a prohibition on buying and reselling anything that can be bought by the members on their own without the middleman. We do not wish to compete with commercial businesses in anything we do. And while I agree that the homemade pies would be acceptable, be careful not to run up against any local codes relating to food handling and preparation.


I can follow your interpretation up to the point where you say selling homemade pies would be acceptable. Homemade pies compete with bakery pies directly. Where I live there is a bakery which sells its own well known brand of pies. As part of their community relations efforts they will sell their pies at a very favorable wholesale cost to non-profit groups for fundraising purposes who can then have great success reselling the popular brand of pies at a marked up retail price.

So in this case you would actually be acting in cooperation(as opposed to competition) with a producer of a local commercial good by buying and reselling their pies. And if you were to sell homemade pies you would actually be in competition with them (albeit with a very unfavorable cost structure and marketing proposition). So it seems like a win-win sort of partnership in pie selling and fundraising. But there is still the fact that by selling in cooperation with the local bakery you are competing with other sellers of pies like the local supermarket.

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aebrown
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Re: What are "commercial goods and services?"

Postby aebrown » Mon Aug 19, 2013 6:12 pm

jonbird wrote:
The second definition is clearly what is meant by "commercial goods and services." The Church wants to make sure that we are not selling a product that is available for sale by any other vendor. So your example of pies illustrates the issue very well.


I think you are actually introducing a third definition and confusing it with my second. If the definition of commercial goods is goods which are for sale elsewhere then the sale of all pies, not just resold bakery pies, would be prohibited because the sale of homemade pies competes directly with the sale of bakery pies. If this is the right definition then really it is a prohibition on the sale of ALL goods and services. If a "commercial good" is a "good which is for sale" then written more plainly the policy would prohibit "the sale of goods or services which are sold" which becomes a circular definition which prohibits the sale of all good and services.

No, I'm not introducing a third definition. You are taking my word "product" and assuming that it means a whole category of possible items for sale. I didn't mean that at all. I meant a particular product. To use the example of pies, I meant that if Bakery X sells "Bakery X Pies" that you can't sell "Bakery X Pies" as part of a fund raising activity. But if you make a homemade pie, you can sell it -- the fact that there are commercial vendors that sell pies is irrelevant.

jonbird wrote:Additionally, another requirement from the same policy is that a fundraiser provide a "meaningful value or service." It is hard to imagine a good which offers a "meaningful value" which is not for sale elsewhere.

Again, I think you're interpreting the word "good" far too broadly. Of course, my neighbor's homemade pie is not for sale elsewhere. But it would provide a meaningful value -- it's very tasty!

jonbird wrote:And if this third definition is correct then what are we to glean from the awkward example of "food storage items" in this context? I have perhaps a misplaced expectation that the example given would illuminate the policy.

If you use the definition I'm promoting, then it is quite illustrative and not at all awkward. If "Emergency Products Z" sells food storage items, then a ward cannot purchase items from "Emergency Products Z", tack on 10%, and then sell them as a fund raising activity. Even if that company donates the products, selling them as a fund raiser is not permitted.

jonbird wrote:So perhaps there is a more helpful and specific fourth definition which prohibits "the sale of goods or services in competition with goods or services available locally."

There's absolutely no mention of the place that items are purchased in the handbook policy, so I don't see how that could possibly be a relevant factor.

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Re: What are "commercial goods and services?"

Postby jonbird » Mon Aug 19, 2013 6:32 pm

aebrown wrote:If you use the definition I'm promoting, then it is quite illustrative and not at all awkward. If "Emergency Products Z" sells food storage items, then a ward cannot purchase items from "Emergency Products Z", tack on 10%, and then sell them as a fund raising activity. Even if that company donates the products, selling them as a fund raiser is not permitted.


Alright I think I understand what you saying. According to your understanding then the mention of the sale of "food storage items" as an example of a prohibited fundraiser is a red herring. It would be perfectly legitimate to sell a food storage item that was created for fundraising. For instance we could buy a bag of wheat, put it in a plastic bin, drop an oxygen absorber in there and create our own product for sale. But it would not be permissible to buy and resell "Emergency Products Z" brand food storage items. Do I have this correct?

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Re: What are "commercial goods and services?"

Postby russellhltn » Mon Aug 19, 2013 7:05 pm

jonbird wrote:For instance we could buy a bag of wheat, put it in a plastic bin, drop an oxygen absorber in there and create our own product for sale.

Iffy. In reading the guidelines, items 2-4 come across to me as "no reselling". The local leaders have the keys to interprete, but buying something and then repackaging and selling it doesn't sound like keeping in the spirit of what's written. The phrase "including food storage items" may have been placed there specifically to deal with what you're suggesting (taking bulk items and repackaging for individual sale).
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Re: What are "commercial goods and services?"

Postby jonbird » Mon Aug 19, 2013 7:41 pm

russellhltn wrote:Iffy. In reading the guidelines, items 2-4 come across to me as "no reselling". The local leaders have the keys to interprete, but buying something and then repackaging and selling it doesn't sound like keeping in the spirit of what's written. The phrase "including food storage items" may have been placed there specifically to deal with what you're suggesting (taking bulk items and repackaging for individual sale).


So in the case of a food storage items fundraiser you are buying wheat, buckets, plastic bags and oxygen absorbers and performing labor to create a product that has some utility that did not exist in the raw state. But your suggesting it might not be enough added value to escape a prohibition on "reselling."

On the other hand if you buy apples, wheat, sugar, butter and apply labor to make an apple pie then perhaps you are adding enough value that you are not reselling?

Some people look at this clause and presume its purpose is to avoid competing with a commercial interest(so as not to offend). But maybe it has the almost opposite purpose of avoiding promoting a commercial interest.

There are many companies that promote their products by offering them to groups who do fundraising. Sometimes they are specially packaged products like BSA popcorn or a private label chocolate bar that is unavailable anywhere else except through that fundraising program. And sometimes they just products that are available at retail, like branded bakery pies, which you can resell. But in both cases you would be aligning yourself with a brand that represents a commercial interest. Perhaps it is that public alignment with a commercial interest that makes the church uncomfortable.

If that is the case then you could theoretically buy bakery pies that are unlabeled and as long as they are not marketed as "Brand X Pies" then you would be in alignment with the policy.

There is a lot of entrepreneurship in the Utah Valley and it is easy to imagine how an entrepreneur could see a wards need to fundraise as an opportunity to promote his products on the back of the Church. Its easy to imagine the scenarios where this could get out of hand. If you are a business that sells food storage items through fundraisers(and I can guarantee you this has been tried in UT) you might defend this practice by pointing out that surely your goals are in alignment with the Church. So perhaps this specific prohibition of food storage items is to make clear that even when the goods or services are in alignment with the mission of the Church it is still not appropriate to align the ward with a commercial interest.

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Re: What are "commercial goods and services?"

Postby russellhltn » Mon Aug 19, 2013 8:25 pm

jonbird wrote:So in the case of a food storage items fundraiser you are buying wheat, buckets, plastic bags and oxygen absorbers and performing labor to create a product that has some utility that did not exist in the raw state. But your suggesting it might not be enough added value to escape a prohibition on "reselling."

On the other hand if you buy apples, wheat, sugar, butter and apply labor to make an apple pie then perhaps you are adding enough value that you are not reselling?

In the first example you are simply repackaging - buying something in bulk and making smaller units. In the second example there is a significant transformation in that the final product bears no resemblance to the raw material.


jonbird wrote:Some people look at this clause and presume its purpose is to avoid competing with a commercial interest(so as not to offend).

I wouldn't rule that out. Having a charity compete against a business can cause problems. Hurt someone enough and they might challenge the tax-exempt status. Then the fun really begins.


jonbird wrote:you would be aligning yourself with a brand that represents a commercial interest. Perhaps it is that public alignment with a commercial interest that makes the church uncomfortable.

Valid concern.


jonbird wrote:If that is the case then you could theoretically buy bakery pies that are unlabeled and as long as they are not marketed as "Brand X Pies" then you would be in alignment with the policy.

I think that's questionable.


jonbird wrote:So perhaps this specific prohibition of food storage items is to make clear that even when the goods or services are in alignment with the mission of the Church it is still not appropriate to align the ward with a commercial interest.

Seems reasonable.
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