As a professional advisor to public cemeteries and funeral homes for over 30 years, I have watched the death care industry change significantly. There has been a consolidation of both cemeteries and funeral homes forming combined companies that are driving the industry.
The following article explores benefits that are available to not-for-profit cemeteries. Please note that the information provided is intended for an individual cemetery or a group of as many as six cemeteries.
Some of the distinct advantages over for-profit cemeteries are as follows:
1. Not-for-profit cemeteries are exempt from taxation by the Internal Revenue Code under Section 501(c)(13). As such, voluntary contributions which are irrevocably dedicated to the permanent maintenance fund of a cemetery are deductible by the donor to the extent allowed by Internal Revenue Code Section 170(a).
2. Ownership of the cemetery is vested in the control of lot owners and holders of certificates of indebtedness from the acquisition of the cemetery land and capital assets. Each lot owner is entitled to one vote per grave lot owned. There usually are limitations for owners of multiple grave lots such as corporations, partnerships or associations limiting the number of votes they have regardless of the number of grave sites owned. Any person who owns certificates of interest or indebtedness usually has one vote based on a dollar value for each vote.
Part of compensation received from not-for-profit cemeteries is interest received on debt issued by the cemetery for burial land and other capital assets. The debt is usually in the form of certificates of indebtedness, bonds or notes and in recent issues has paid interest as high as 8% per annum, and may or may not have a maturity date, depending on individual state laws. Based on current interest rates in the market place, they are readily salable should the owner no longer decide to be in the cemetery industry. However, they are usually kept with the families that organized the cemetery. Their ultimate value as a good investment depends on the financial stability of the individual cemetery. There is no need to be in the death care industry to own them.
The general public is also well protected when cemeteries are formed as not-for-profits because management is always subject to removal by lot owners, governmental agencies and by non-compliance with Internal Revenue Regulations.
Management of not-for-profit cemeteries must be prudent in the cemetery industry. Proper management could lead to generations of employment.