Trading

Trading is the buying and selling of goods to make a profit. The object of trading is to be able to buy goods which are then resold at a higher price. The organisation therefore make a profit on the difference between the cost price and the selling price of the goods. This profit is referred to as the Gross Profit (and sometimes it is known as the Gross Margin).

Selling Price
$120
Cost price
$100
Gross Profit
$ 20

In the sport and recreation industry trading can be a significant sources of funding. Typically the goods that are traded (sold) for profit include:

  • Alcoholic Beverages (e.g. Beer, wines and spirits)
  • Non-Alcoholic Beverages (w.g. coca-cola, coffee, tea)
  • Food (hot dogs, pies, lollies)
  • Clothing (shirts, shorts, socks, tracksuits)
  • Equipment (racquets, bats, balls)

It should be noted that there are restrictions placed on the amount of trading that a non-profit organisation can undertake. In Queensland, Australia, the Associations Incorporation Act 1987 (para 4.1.d) states an association may trade with its members or the public, but trade is ancillary to the associations principal purpose, and not substantial when compared with its other activities. This aspect of law aims to stop people from setting up a non-profit organisation and using it as a front for what is really a business, and thus avoiding the payment of TAX.

It should also be noted that non-profit organisations can get themselves into financial difficulty by trading. It is not always plain sailing. Problems can occur losing stock, making insufficient profit margins and lack of sales. This may be particularly so if people are employed such as bar attendants.

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