Should we be a non-profit?

November 13, 2007 1:05 AM

Would it be in my tiny alt-monthly print newspaper's interest to become a non-profit? Our print run is under 5000 but our content is increasingly amazing. A small publishing group in my community is dissolving and offering to turn their non-profit status over to us but few of our members can even begin to grasp what this would mean. We are located in Chicago (Pilsen), and have been growing in contribution/readership, but have failed to make a dime. This is not by any means a money making venture. Our members have been infighting about what non-profit status would mean in terms of available grants.

I've offered to research our options but I don't know where to begin. I plan on going to the Thompson Center this week to talk to folks, but I'm not sure what I need to be asking. I'd like any relevant advise or contacts, period, but my/our specific questions thus far are:

- Some of our editors seem to think that it is easier to obtain grants as individual artists/ writers as opposed to on behalf of a collective. Does anybody have any Chicago-specific advise to contribute?

-We don't really make ad revenue and have given up on it in favor of benefit shows, local art involvement, and various "get $800" schemes. Do we even NEED non-profit status? Is it something that we should view as a "what if?", or is it a "pointless waste of time"? (The only benefit that 's been brought up is the notion of donators being able to write checks to a company as opposed to an individual.)

- The name of the publisher's non-profit that wants to give us the status isn't the first one that we'd pick for ourselves. It's not entirely terrible, but it doesn't really speak for our paper at all. Is there a chance that we could change the name if we were to take this on? Is this even important?

Is any of this even important?

Again, questions would be appreciated as well as answers. This is a fact-finding mission and I'm not even sure what facts need to be found.

posted by macrowave to media & arts (7 comments total)

The only benefit that's been brought up is the notion of donators being able to write checks to a company as opposed to an individual.

In the US, the big benefit to your donors would be that donations would become tax-deductible. If your donors care enough to give now, they're fairly likely to kick in their tax savings as part of future donations. Furthermore, many people (myself included) only give money to non-profits; I assume any group that can't meet the low bar of maintaining non-profit status has serious management issues.

Given that, in your shoes, I would assume being a non-profit is the right choice unless someone can make a clear financial case against it. The arguments against that you cite are not convincing -- in particular, there's nothing to say that folks associated with a non-profit couldn't also apply for individual grants.
posted by backupjesus at 3:15 AM on November 13, 2007

Some of our editors seem to think that it is easier to obtain grants as individual artists/ writers as opposed to on behalf of a collective. Does anybody have any Chicago-specific advise to contribute?

I can't speak to Chicago specifically, but the world of foundation grants that would be open to your non-profit vastly exceeds the opportunities for grants to individuals.

To give you a sense, there are, I understand, about 80,000 charitable foundations in the country. Majority of them will/can only give to registered 501(c)3s (non-profits).

I don't know much about changing the name of the organization, but suspect it would be possible. However, it's not terribly necessary, as that name need only appear on legal documents and checks.

I might begin by doing a basic search of foundations that support non-profit periodicals in the Chicago area. The Foundation Center can help with this, as can, alternatively, a company I work for.
posted by prophetsearcher at 4:28 AM on November 13, 2007

I don't really understand your fellow editors' concern.

They'd still be eligible for most grants and such as individuals, because those are by definition to individuals and not to the paper whether it's for-profit or non-profit.
And your paper would now be eligible for grants to non-profits.

As for the name, look into "doing business as" or "d/b/a".
posted by Jahaza at 5:08 AM on November 13, 2007

I don't see how one could "turn over" non-profit status to another. You can just incorporate yourself. I suggest you look into this with a lawyer, explaining about your desire to transform into a non-profit and asking about limiting fees. You are skating on thin ice with the IRS if you are not careful about it. And regardless of the odds of getting caught, the IRS is a bunch of people you most definitely do not want to piss off. When they go after you it will hurt bad.
posted by Ironmouth at 8:11 AM on November 13, 2007

Seconding Ironmouth. If you want to be incorporated as a nonprofit, just do it for your own group. Taking over another nonprofit is questionable at best (is it permitted under the Code? what if they have liabilities? etc.).

There are some great resources out there to educate small wanna-be nonprofits about how to incorporate, whether to incorporate, DIY forms and instructions, and so on. See here, here, here.

The other cool thing is that helping a small nonprofit incorporate is a classic pro bono task for a large law firm. It's an easy and finite task. Here is the pro bono coordinator for one large law firm.

Another option is to join an umbrella nonprofit. Here's one I found googling. This releases your group from such obligations as maintaining a board, board minutes, etc. But the umbrellas charge an administration fee.

You and your group don't have to decide this minute, you can review your options, learn about what it all means, and make a decision. I wouldn't jump on the "dissolving" nonprofit, I would have the group make a decision for themselves in their own time.
posted by ClaudiaCenter at 9:21 AM on November 13, 2007

You guys have been super helpful. Thanks!
posted by macrowave at 1:22 PM on November 13, 2007

Becoming an incorporated nonprofit (especially 501c3) helps fundraising tremendously.
posted by flug at 2:00 PM on November 13, 2007