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 »

New Tricks for Old Dogs

Posted by Christy Bolingbroke On May - 19 - 2011

(This title and entry is not meant to insult any one artist, institution, or dog.)

From my perspective, many artists originally incorporated because they saw other people doing it; other people getting grant monies to support their work and determining 501(c)(3) must be the way to go. These same artists somehow persevered, endured, and/or emerged as institutions thirty or forty years later and feel the nonprofit ball-and-chain is something that somehow happened to them. Is this need for alternative models a real issue or is it a midlife crisis for the incorporated arts field?  Read the rest of this entry »

What IS Your Business Model?

Posted by Maud Lyon On May - 19 - 2011

Maud Lyon

Business structures are one thing; business models are another. For all nonprofit arts and culture organizations, there are six sources of revenue: Gifts from individuals; gifts from corporations; foundation grants; government support; earned revenue (tickets or sales, fees for service, rentals, etc.) and investments (including endowments).

Your business structure establishes a foundation and sets the stage. (For all the charitable support, being a 5o1(c)3 is essential. An LC3 would focus more on earned revenue.) However, your business model is the mix of those six sources. Cultural organizations are not all the same – they have a number of different business models, all within the 501(c)3 structure. Each drives different behavior and requires a different attitude. As a thought-starter, here are five ways to think about it. In our experience, most organizations have a mixed model and are not purely one or another.  Read the rest of this entry »

Creativity and Economic Development – Together?!?!

Posted by Helena Fruscio On May - 19 - 2011

Helena Fruscio

To have the creative industry be invited to the top economic development tables is almost unheard of in any community. Let’s face it; classic business development and support organizations can have a hard time wrapping their heads around the value of this dynamic industry. Often, its value is hindered because it is hard to fully quantify the impacts of these businesses and individuals. The quantification is often pieced together from many sources and the numbers never really seem to capture the true dynamism and impact.

The early leadership of Berkshire Creative had the amazing foresight to be inclusive in our definition of the creative economy. The Berkshire Creative Economy Report fully clarifies the different segments of the creative economy and their relationships, which have significant overlap with one another.  Read the rest of this entry »

Circus Mojo – Part Two

Posted by Paul Miller On May - 19 - 2011

Paul Miller

Circus as an industry has been incredibly exploitative.

When I joined the circus as a college drop-out in the late 1990s, the Soviet Union fell and with it, went their highest art form—the circus. Their amazing artists had no support from the government, so American circuses enticed these talented individuals to come to the United States. They were paid thousands of rubles which seemed like a lot of money but was, in fact, only about $50 per week. This is not unusual.

I’ve worked with many Russian and Asian circus teachers who can barely read or write. In 2000, I had a six-month gig in Japan with a fellow performer who could speak seven languages but his agent stole half his fee because he could not read the contract.  Read the rest of this entry »

The Power 7: A Checklist For Future Business Models in Arts & Culture

Posted by Patricia Martin On May - 18 - 2011

Patricia Martin

Open talk about new business models in the arts is a cultural signal. It’s a watermark that tells us the tides are shifting. Digital culture is eroding some of art’s traditional value proposition.

That’s not what worries me.

This does: Even if the arts can come to occupy a new role in people’s lives, will they will be able to communicate this role to attract new users—especially younger audiences?

Cultivating younger audiences will be important. They are the future. But using marketing messages and tactics from the past to reach them might mean that your organization—no matter what its business model, will not be around to see them join your ranks.  Read the rest of this entry »

Artist-Centered Business Models

Posted by Rebecca Novick On May - 18 - 2011

Rebecca Novick

In the chapter I contributed to 20under40: Reinventing the Arts & Arts Education for the 21st Century, I highlighted a theater company called 13P, a group of 13 playwrights who came together with the intention of producing one play by each of them and then disbanding. In that context, I was celebrating their interest in a mission that could be accomplished in a limited timespan, but they also serve as an astoundingly successful example of an organization centered on artists and driven by the agenda of its founding artists.

The 13P model relies on placing its resources in the hands of each playwright in turn, and hiring administrative and producing help show by show, depending on the needs of a particular project. In Minneapolis, the Workhaus Collective is exploring a similar model while in residence at the Playwrights Center (also a good example of a larger organization offering umbrella services to a smaller one).  Read the rest of this entry »

Navigating to a New Business Model – Part 1: The Challenge

Posted by Jeanie Duncan On May - 18 - 2011

Jeanie Duncan

The Challenge: Assessing the Organization’s Relevance

According to the latest statistics maintained by Americans for the Arts, there are about 5,000 local arts agencies in the United States. Many of these agencies take the form of a United Arts Council. And while there are some common structural and operational similarities, I like to say that, “If you’ve seen one United Arts Council, you’ve seen one United Arts Council.” At its best, a United Arts Council is specifically designed to serve its particular regional community through a distinctive and unique blend of programs and services.

The United Arts Council of Greater Greensboro’s (UAC) portfolio of services and programs includes fundraising, grantmaking, marketing, and advocacy. The UAC was established in 1961 by the business community as a united fundraising effort for a core group of arts organizations. For more than 40 years, the UAC has operated an annual campaign (known within the industry as a “United Arts Fund,” or UAF), which at its fundraising peak in 2008 raised $1.62 million. In this regard, Greensboro’s UAC is like most across the country: It’s both a fundraising engine, cultivating and securing contributed revenue largely from the local private sector, and a chief grantmaker to the local arts sector, investing approximately 90 percent of funds granted into a small, defined group of member agencies.  Read the rest of this entry »

Sorting the 501(c)(3) Arts Basket

Posted by Claudia Bach On May - 18 - 2011

Claudia Bach

We might look more critically at how our current structure lumps radically different entities into this  single basket labeled the nonprofit arts organization: very large institutions such as the Metropolitan Opera or the Getty Museum; regional theaters and community art centers; tiny fringe theaters, artists’ start ups, and community festivals all share nonprofit arts organization status. Some of these, especially the longstanding institutions, seem to handle the 501(c)(3) structure with success. At the other end of the spectrum we find artistic work that seems to have woken up to find itself carrying a big heavy carapace made up of 501(c)(3) regulations and practices.

Perhaps it is time to stop assuming that one 501(c)(3) basket is the right container for all nonprofit arts entities. Maybe we can start to sort arts groups into a greater diversity of structures while still assuring that we have mechanisms to encourage artistic work and access. Here are some things I find interesting as we navigate this terrain.  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 »

Incubators – Not Just for Chickens

Posted by Valerie Beaman On May - 18 - 2011

Valerie Beaman

Arts incubators are not a new model, but it seems to me that recently some of them have taken on a new joie de vivre. I attribute this to the fact that they are no longer necessarily focused on developing artists into new 501(c)(3) organizations, but empowering ordinary mortals to try their hand at creating something for their own imagination and amusement.

The success of organizations like Brooklyn’s 3rd Ward is confirming research which finds that the younger generation wants to participate in art, not passively observe it. 3rd Ward is a for-profit membership organization which provides space, back office services, food, galleries, a supportive community, and top-of-the-line creative resources, including photo studios, media lab, jewelry studio, wood & metal shops, along with a huge education program. You don’t have to be a member to enjoy the classes, but membership gets you access to the studios.  Read the rest of this entry »

Shopping Around Arts & Business Partnerships

Posted by Kate Marquez On May - 18 - 2011

Kate Marquez

There is no question the arts are essential to build community in dynamic, lasting ways. However, arts organizations are constantly defending this concept. Unfortunately, in today’s economic climate it seems the best way to keep the arts alive is to attach monetary terms to their worth.

Southern Arizona Arts and Cultural Alliance (SAACA) has found there is more to gain than lose by venturing down this avenue and building lasting partnerships with businesses, for the sake of preserving art and supporting artists and musicians.

When local government funding was no longer available, due to budget cuts, SAACA turned to the business community to collaborate on events and programs. SAACA began to build arts-related partnerships, creating benefits for all parties that continue to unfold and grow.  Read the rest of this entry »

Need a New Way of Working? How About the Old Way?

Posted by Diane Ragsdale On May - 18 - 2011

Diane Ragsdale

There’s an old Dunkin’ Donuts commercial that ran back in the 1980s. It first showed a baker’s alarm clock going off in the wee hours of the morning and then the baker shuffling into the shower, and then into the bakery, all the time muttering “Time to make the donuts…The donuts!” When the alarms go off at the homes of artistic and managing directors of nonprofit arts institutions across the United States, I imagine them waking up and sighing “Time to meet more donors…The donors…The donors!”

There’s a lot of talk these days about transformation of the arts sector. But before we consider what we might look like in the future it might be worth reflecting on the fact that the arts sector has undergone enormous transformation already. Many institutions have evolved from rough-and-tumble clans filled with artists running around in blue jeans to…well, to professionalized bureaucracies filled with fundraisers striding around in suits. We were prodded into this transformation by corporate types who perceived our way of doing business as chaotic and, therefore, ineffective.

But what if the corporate types were wrong decades back when they told us that becoming more like them would make us more stable and, therefore, better able to fulfill our missions?  Read the rest of this entry »

Un-business Model

Posted by Rebecca Novick On May - 17 - 2011

Rebecca Novick

Asked to write about new business models I find myself instead thinking of un-business models. How can we move the business from the center where in fact the art belongs? Not move the money, which is always necessary to some degree, but the business, the unholy preoccupation with systems and structures and buildings and the perpetual employment of administrators.

I have the honor to be involved in a project that is striving to do this, a big, messy, ambitious collaboration with spiritual aims and practical struggles, led by a playwright and shepherded by his family of collaborators. Soulographie: Our Genocides is an international project organized by playwright Erik Ehn to bring together the 17 plays he wrote in the last decade about various genocides. Teams in ten cities are producing one or more of the plays locally, in preparation for performances of the full cycle at La Mama in New York City in November 2012.  Read the rest of this entry »