Help forming a 501c / nonprofit for an art gallery
January 11, 2005 11:00 AM
Help forming a 501c / nonprofit for an art gallery. [+]
Some background: I'm starting a gallery in Sacramento, CA which will primarily focus on exhibitions of video/experimental/install artists, in particular featuring residents of northern california. The gallery will *not* concern itself with the sale of works except possibly as a fund-raising event. I would like to set up the gallery as a non-profit in order to encourage tax-deductable donations and take advantage of companies that offer salvage to non-profits. Please note that this is an eventual goal, and not necessary for the gallery's existence/start (it's ok if the process will take some time to complete, as long as i can begin making steps toward it now) -- i have already decided to fund the gallery out of my own pocket and have already leased a space (for two years) to house it, but i would like to be able to generate enough income on the gallery to offset rent/promotion/equipment (if i can't, i'm not going to cry about it; it's money well-spent).
The question: I'm having difficulty sorting out all the information online -- ideally, i need to know
1) Is a non-profit the best route? What *kind* of non-profit should i get? I would like very much to maintain sole ownership/management -- is this possible with a non-profit or will i need to take on partners?
2) can someone give me a step-by-step guide to setting up a non-profit (regarding, primarily, the forms that need to be filed)? Most of the nonprofit information i've found is fairly unhelpful, as it emerges from the websites of law firms which speak little to the filing process. I don't need help writing a mission statement -- i need to know where to send my mission statement, or even if I *need* to have a mission statement. I realize that just about everyone recommends the nolo press book, but i'd like to save my fifty bucks for a case of charles shaw to have at the opening, if at all possible.
I can clarify the project if necessary -- sorry to be vague about what i want, but i don't really know much about non-profits. Thanks!
Some background: I'm starting a gallery in Sacramento, CA which will primarily focus on exhibitions of video/experimental/install artists, in particular featuring residents of northern california. The gallery will *not* concern itself with the sale of works except possibly as a fund-raising event. I would like to set up the gallery as a non-profit in order to encourage tax-deductable donations and take advantage of companies that offer salvage to non-profits. Please note that this is an eventual goal, and not necessary for the gallery's existence/start (it's ok if the process will take some time to complete, as long as i can begin making steps toward it now) -- i have already decided to fund the gallery out of my own pocket and have already leased a space (for two years) to house it, but i would like to be able to generate enough income on the gallery to offset rent/promotion/equipment (if i can't, i'm not going to cry about it; it's money well-spent).
The question: I'm having difficulty sorting out all the information online -- ideally, i need to know
1) Is a non-profit the best route? What *kind* of non-profit should i get? I would like very much to maintain sole ownership/management -- is this possible with a non-profit or will i need to take on partners?
2) can someone give me a step-by-step guide to setting up a non-profit (regarding, primarily, the forms that need to be filed)? Most of the nonprofit information i've found is fairly unhelpful, as it emerges from the websites of law firms which speak little to the filing process. I don't need help writing a mission statement -- i need to know where to send my mission statement, or even if I *need* to have a mission statement. I realize that just about everyone recommends the nolo press book, but i'd like to save my fifty bucks for a case of charles shaw to have at the opening, if at all possible.
I can clarify the project if necessary -- sorry to be vague about what i want, but i don't really know much about non-profits. Thanks!
Oh, and here's a decent FAQ, including a list of steps to take if you want to go the non-profit route.
posted by profwhat at 11:10 AM on January 11, 2005
posted by profwhat at 11:10 AM on January 11, 2005
Your goal of being a nonprofit conflicts with your goal of retaining complete control.
is there any other option where I'll be able to retain control and yet experience tax/donation benefits?
i just seem to believe that since (at this point) I'm funding the organization, i should be able to direct it. what do others do in this sort of situation?
"Will I allow the board of directors to set policy, including my salary, benefits, and even my employment by the organization?" If your answer is "No, I want to keep control of the organization," then you want to make your corporation for-profit. If, however, you want the board to be autonomous, then a nonprofit organization can be a good fit. Remember, you can sit on the board and you can have a vote when it comes to determining policy. However, on issues that affect your employment, salary, and benefits, you must excuse yourself from voting.
wow. ok, i guess that won't work then. I'm worried primarily about censorship/favoritism issues -- not to say that I'm entirely unbiased, but I don't want a bunch of jackasses determining what occurs in a space that I'm building and will be living in. what are my options for for-profit companies? Am i eligible for grants/donations/etc as a for-profit? Has anyone here had experience setting up this sort of exhibition space/gallery before?
posted by fishfucker at 11:18 AM on January 11, 2005
is there any other option where I'll be able to retain control and yet experience tax/donation benefits?
i just seem to believe that since (at this point) I'm funding the organization, i should be able to direct it. what do others do in this sort of situation?
"Will I allow the board of directors to set policy, including my salary, benefits, and even my employment by the organization?" If your answer is "No, I want to keep control of the organization," then you want to make your corporation for-profit. If, however, you want the board to be autonomous, then a nonprofit organization can be a good fit. Remember, you can sit on the board and you can have a vote when it comes to determining policy. However, on issues that affect your employment, salary, and benefits, you must excuse yourself from voting.
wow. ok, i guess that won't work then. I'm worried primarily about censorship/favoritism issues -- not to say that I'm entirely unbiased, but I don't want a bunch of jackasses determining what occurs in a space that I'm building and will be living in. what are my options for for-profit companies? Am i eligible for grants/donations/etc as a for-profit? Has anyone here had experience setting up this sort of exhibition space/gallery before?
posted by fishfucker at 11:18 AM on January 11, 2005
Check out this FAQ from Nolo Press about different small business structures.
posted by jasper411 at 11:45 AM on January 11, 2005
posted by jasper411 at 11:45 AM on January 11, 2005
I think it might be possible to set up the nonprofit as a stock-based company, and set yourself up as the sole stockowner. Then, you'd be able to hire and fire the board. (This might hurt your ability to raise donations, and it might have other tax consequences--I'm really not sure).
But don't rely on that, it's just a guess. I recommend taking a look at Nolo's book on nonprofits.
posted by profwhat at 11:49 AM on January 11, 2005
But don't rely on that, it's just a guess. I recommend taking a look at Nolo's book on nonprofits.
posted by profwhat at 11:49 AM on January 11, 2005
well, the non-profit would have to "sublease" the gallery space from me (right now my friend and i are on the lease as individual tenants), so I guess I would have some degree of control over the board (in that they could go somewhere else and take the name/finances/etc, but not do things i don't approve of in the space).
posted by fishfucker at 11:58 AM on January 11, 2005
posted by fishfucker at 11:58 AM on January 11, 2005
IANAL, but I looked into for-profit corporate law in Massachusetts, and one thing I learned that may influence your decision is that the founder(s) of a corporation can nomimate and approve the board members. It is part of the process for filing for incorporation. If that is possible for a Californian non-profit corporation, and it most likely is, stack the board with folks who can be nearly guaranteed to see things your way. Like your long-term SO or your parents.
posted by McGuillicuddy at 12:58 PM on January 11, 2005
posted by McGuillicuddy at 12:58 PM on January 11, 2005
If you're subleasing space and all that, I'd think about becoming a foundation. IIRC foundations can take deductible donations as well.
I created a 501c3 a couple of years ago, and while time-consuming, the paperwork was pretty easy. When you file, you'll get a case officer who'll help answer your questions. You will almost inevitably have to send more info in.
It also costs either $150 or $500 to apply, depending on if you expect to clear an average of $20K a year or not. I would spring the $50 on the book; you'll spend hours on the paperwork anyway.
Also, when you incorporate at the state level, make sure you put in the incorporation language about your nonprofit status. Make sure it's the right language, though. The IRS was very specific with us about that. One word cost us about $120 in repeat incorporations.
posted by atchafalaya at 2:35 PM on January 11, 2005
I created a 501c3 a couple of years ago, and while time-consuming, the paperwork was pretty easy. When you file, you'll get a case officer who'll help answer your questions. You will almost inevitably have to send more info in.
It also costs either $150 or $500 to apply, depending on if you expect to clear an average of $20K a year or not. I would spring the $50 on the book; you'll spend hours on the paperwork anyway.
Also, when you incorporate at the state level, make sure you put in the incorporation language about your nonprofit status. Make sure it's the right language, though. The IRS was very specific with us about that. One word cost us about $120 in repeat incorporations.
posted by atchafalaya at 2:35 PM on January 11, 2005
I have founded several not-for-profits. You only need a board of three people. You can be the president, your partner/best friend can be the secretary-treasurer, and one other highly trusted friend/relative can be the vice president.
In your case, the California Secretary of State is the place to start -- and in particular, the business portal. You can become a non-profit corporation in the state of California by filling out a simple form and paying a $100 or so.
However, because you also want tax-deductible status, you must do additional work to become a 501(c)(3) corporation. If you have any lawyer or accountant friends who have experence in this area, it may be worthwhile to pay them to file your papers instead of wading through the details yourself.
As atchafalaya notes, the paperwork is relatively straight-forward, but it's also easy for a neophyte filer to make a mistake that will cost extra money and time.
I suggest you read this excellent guide on how to form a 501(c)(3) and then decide whether you want to hire an attorney to help you with this process. Good luck!
posted by naomi at 5:37 PM on January 11, 2005
In your case, the California Secretary of State is the place to start -- and in particular, the business portal. You can become a non-profit corporation in the state of California by filling out a simple form and paying a $100 or so.
However, because you also want tax-deductible status, you must do additional work to become a 501(c)(3) corporation. If you have any lawyer or accountant friends who have experence in this area, it may be worthwhile to pay them to file your papers instead of wading through the details yourself.
As atchafalaya notes, the paperwork is relatively straight-forward, but it's also easy for a neophyte filer to make a mistake that will cost extra money and time.
I suggest you read this excellent guide on how to form a 501(c)(3) and then decide whether you want to hire an attorney to help you with this process. Good luck!
posted by naomi at 5:37 PM on January 11, 2005
And I'd be willing to bet that "Fishfucker's Art Gallery" is still available as a business name.
posted by naomi at 5:42 PM on January 11, 2005
posted by naomi at 5:42 PM on January 11, 2005
Being interested in this question, besides buying the Nolo Press kit mentioned, I got a PDF book from CompassPoint.org called Get Ready Get Set. Email me if you want a copy, bill at my username.com.
posted by billsaysthis at 10:06 PM on January 11, 2005
posted by billsaysthis at 10:06 PM on January 11, 2005
This thread is closed to new comments.
Nothing is wrong with a nonprofit making a ton of dough, by the way. Harvard is a nonprofit, and it rakes in more cash than most for-profit corporations. The major distinction between a nonprofit corporation and a profit corporation is that a nonprofit is never allowed to distribute its profits as dividends to stockholders.
posted by profwhat at 11:08 AM on January 11, 2005