Randy Cohen

This post is one in a series highlighting the Local Arts Index (LAI) by Americans for the Arts. The LAI provides a set of measures to help understand the breadth, depth, and character of the cultural life of a community. It provides county-level data about arts participation, funding, fiscal health, competitiveness, and more. Check out your county and compare it to any of the nation’s 3,143 counties at ArtsIndexUSA.org.

Today we release Local Arts Index indicator #6 (out of 50).

Total nonprofit arts organizations per 100,000 population (Based on those filing IRS 990s)

The vigor of the arts rests in many ways on the thousands of nonprofit organizations that present and organize arts programs in communities around the country. In many arts disciplines—such as visual and performing arts, historical and museum organizations, and arts education—nonprofit status is the norm.

This indicator measures how many nonprofit arts organizations are in a county per 100,000 population, demonstrating the breadth of the nonprofit arts sector in a community as experienced by its residents.

With all the attention given to arts funding, cultural policy and economics, and the impact of the arts on a community, it is especially significant to show how available nonprofit arts groups are as part of the capacity of the arts in a county.

Nonprofit arts organizations that filed an IRS Form 990 can be found in 1,204 counties in the U.S. Nationally, the average in those counties is 20.9 arts organizations per 100,000 population, and the median county has 15.3. Also nationally, the total number of nonprofit arts organizations increased from about 75,000 in 1999 to 113,000 in 2010.

It is worth noting, however, that only about 35 percent of these organizations file a Form 990 in any given year. The likely reason for 65 percent not filing is that they are small (organizations with less than $25,000 in total revenues are not required to file Form 990).

All of this data comes from the National Center for Charitable Statistics at the Urban Institute.

In 2006, Congress asked the IRS to keep better track of the nation’s 1.7 million nonprofit organizations. Yesterday, the IRS revoked the tax-exempt status of 279,599 of them for not filing legally required documents for three consecutive years (2007-2009). Nearly 27,000 of them are nonprofit ARTS organizations.

The 26,875 arts groups represent 20 percent of all arts nonprofits—the largest percentage decrease among any of the charities. By contrast, only seven percent of religion-related organizations lost their exemptions. Cuts were noted in all arts categories, including 304 symphony orchestras, 702 museums, 395 arts councils, 2,533 theaters, 254 arts alliance/advocacy organizations, and 664 choirs.

Source: Urban Institute, National Center for Charitable Statistics, 2011.










Read the rest of this entry »

Tagged with: | |

Low-Profit But How Much Potential? (Part 1)

Posted by Adam Huttler On May - 26 - 2011

Adam Huttler

The L3C (low-profit limited liability company) construct has been getting a ton of virtual ink lately. As a way of establishing my dubious credentials, I’ll note that I was among the first in our field to note the arrival of the L3C, and I’ve written and debated about it quite a bit since then. Fractured Atlas formed an L3C subsidiary for our insurance program back in 2008.

All of that is just to establish why I’m having trouble thinking of something new and inspiring to say about the L3C. I suppose it also explains why I’m interviewed on the subject frequently enough that I can confidently lump the questioners into two categories: (1) big thinkers – often grad students or consultants – who see tremendous potential in the L3C but have only a vague concept of its real legal and financial contours, and (2) jaded skeptics – often professors or attorneys – who know just enough about the L3C to have serious doubts about its applicability to the arts.  Read the rest of this entry »

Risky Behavior

Posted by Margy Waller On May - 24 - 2011

Margy Waller

Before we start developing the public policy campaign to maintain status quo for charitable status and deductions, let’s make sure we know why we are doing it – and that it’s really a good fit for us.

Reviewing all the blog posts in this Salon in one read, I’m struck by the number of writers pointing out limitations of the special status that makes donors to nonprofit arts organizations eligible for a tax deduction.

Patricia Martin encourages us to rethink the slavish devotion to 501(c)(3) status if we want our organizational structure to keep up with the “rising generation [that] has already changed how it consumes culture and interacts with institutions.”  Read the rest of this entry »

Scary Policy Conversation and Creative Change

Posted by Margy Waller On May - 20 - 2011

Margy Waller

We’ve all been reading about suggestions for policies to address federal budget issues – including possible big changes to the tax deductibility of contributions to nonprofits. Scary, right? Opportunity, maybe!

Setting aside for a moment the structural and legal issues regarding tax status, nonprofit arts and culture organizations are struggling on the fundraising playing field. Plus, arts organizations are challenged by public perception about the role of arts and charities in community.

We know that when people think about the arts, they’re likely to think first of entertainment. That’s cool – when we are looking for consumers and trying to sell tickets or memberships.

But, when we’re seeking contributions for day-to-day operations – this perception makes our work a lot harder.  Read the rest of this entry »

Stop Pretending You’re an Accountant

Posted by Adam Huttler On May - 19 - 2011

Adam Huttler

For decades now, the conventional wisdom has been practically knee-jerk: if you want to do your own thing in the arts, the first step is to start a 501(c)(3) corporation. I’m not sure this was ever good advice, but I’m positive it’s lousy today.

Don’t get me wrong: the 501(c)(3) model is a great choice if there are visions of marble columns dancing in your head. That’s because the rules and regulations on tax-exempt organizations are predicated on the archetype of a perpetual, quasi-public institution. Like all corporations, 501(c)(3)s by default are immortal; they are designed and expected to outlive the participation of their founders and are difficult to shutdown. Moreover, federal and state-level charity regulations are complex and onerous but generally pretty effective at preventing (or at least mitigating) abuses of the public trust.  Read the rest of this entry »

What is Your Community Benefit?

Posted by Rebecca Novick On May - 19 - 2011

Rebecca Novick

The reason for the tax break for nonprofits is that nonprofits are meant to provide a “community benefit.”

When you apply for nonprofit status, the forms you have to fill out include making a case that the benefit you will provide (often expressed in your mission statement) is worth the state letting go of your potential tax revenue.

If you’re starting a homeless shelter, it’s pretty obvious that it is (“lessening the burden of government” is explicitly listed in the IRS guidelines for exempt purposes). But what about your small theater company? Your chamber ensemble? Your single-choreographer dance company? What are you explicitly doing to (more from the IRS language) relieve the poor and distressed, advance education, and combat community deterioration?

Does art in general help achieve these aims?  Read the rest of this entry »

The Arts & New Philanthropy

Posted by James Undercofler On May - 18 - 2011

James Undercofler

Perhaps the most significant and radical departure from the traditional 501(c)(3) (NFP) are the direct to consumer internet businesses, such as artistShare , Etsy, etc. In addition, philanthropy/investor sites such as Kickstarter are revolutionizing giving.

The direct to consumer businesses are organized either as limited liability corporations (LLCs) or individually-organized entities (individuals file IRS, Section C, 1040). Assessment of risk determines whether to form an LLC or not. What’s particularly interesting about these sites is their range: from those that involve “audience” in the artistic process, to those that aggregate artistic products in an almost social network sort of way. From my limited knowledge of their net revenue, I do know that some of these sites are producing significant profits to their owners/creators.

Some assert that the “new investors/donors” resulted from Hurricane Katrina and the massive earthquake in Haiti, that technology that made it easy to give small amounts through one’s cell phone.  Read the rest of this entry »

L3C Cha-Cha-Cha

Posted by Diane Ragsdale On May - 16 - 2011

Diane Ragsdale

In his book The Revolutionary Stage, Joseph Zeigler states that Arena Stage in Washington, DC, began as a for-profit corporation by selling shares totaling $15,000 (at seven percent interest) to 300 Washingtonians. As part of doing research related to my dissertation topic—the impact of economic forces on the American resident theater movement—I recently read a speech called “The Long Revolution” written in 1978 by Zelda Fichandler, founder of Arena Stage.

She writes that she founded the theater in 1950 as a regular profit corporation, in order to better maintain control of its artistic policy, and that the theater became a nonprofit seven years later “in order to become eligible for gifts and grants, especially from the Ford Foundation which entered the field that year.”

Ms. Fichandler elaborated on the transition to becoming a nonprofit, saying:

“[…] we made all of our expenses at the box office for roughly the first fifteen years of our existence. It was as late as the mid-sixties when we conceded that we couldn’t continue to do this, but had to become a deficit-producing organization.  Read the rest of this entry »