Hobby that has grown into something more seeks advice on making it formal.
May 14, 2006 8:03 PM Subscribe
My husband, a friend and I have started a community theatre group. We're in the midst of our first show, and we've gotten great publicity and we're getting healthy first-time audiences. We want to keep doing this, but we think we need to incorporate (become an LLC, LLP, something) before we get in too far. A lot . . .
The long of it is this: our current run is basically a test to see how things will go, and things have gone extraordinarily well. We are operating under the auspices of a particular city at the moment, and futhermore, we are using the grounds of a local historic building for the shows. We are taking donations, but with the caveat that they are going to the upkeep of the building/grounds and possibly to future shows (That is, the $$ goes directly to the historic building people, and then we get back what they want to give us in the form of a stipend, maybe. We aren't guaranteed anything as yet.)
However, given that things are going quite well and we want to remain independent and not tied to this particular city government, we want to possibly incorporate and/or become a 501(c)(3). We have the very good possibility of pro-bono legal work for any of this, so the cost of that isn't necessarily an issue. The issue is that we're not 100% sure what the best choice will be for a three-person operation that will decidedly NOT make money for the foreseeable future. Also, people keep offering us money/services and we want to be able to take advantage of that -- seems as if we would want to be a nonprofit, but I'm just not sure that this is the best choice for the long run, and I'm under the (possibly mistaken) impression that we really only want to have to do this once. We are, in short, looking for information about doing this kind of thing (I've read the IRS stuff on 501(c)(3)) and any practical, nonbinding, clearly not-offered-as-legal-advice information on how we might like to proceed.
The long of it is this: our current run is basically a test to see how things will go, and things have gone extraordinarily well. We are operating under the auspices of a particular city at the moment, and futhermore, we are using the grounds of a local historic building for the shows. We are taking donations, but with the caveat that they are going to the upkeep of the building/grounds and possibly to future shows (That is, the $$ goes directly to the historic building people, and then we get back what they want to give us in the form of a stipend, maybe. We aren't guaranteed anything as yet.)
However, given that things are going quite well and we want to remain independent and not tied to this particular city government, we want to possibly incorporate and/or become a 501(c)(3). We have the very good possibility of pro-bono legal work for any of this, so the cost of that isn't necessarily an issue. The issue is that we're not 100% sure what the best choice will be for a three-person operation that will decidedly NOT make money for the foreseeable future. Also, people keep offering us money/services and we want to be able to take advantage of that -- seems as if we would want to be a nonprofit, but I'm just not sure that this is the best choice for the long run, and I'm under the (possibly mistaken) impression that we really only want to have to do this once. We are, in short, looking for information about doing this kind of thing (I've read the IRS stuff on 501(c)(3)) and any practical, nonbinding, clearly not-offered-as-legal-advice information on how we might like to proceed.
first file the corp, then worry about filing for the tax exempt status. (IANAL)
posted by Izzmeister at 12:09 AM on May 15, 2006
posted by Izzmeister at 12:09 AM on May 15, 2006
IANAL, but I've chartered both non-profit and for-profit organizations in the U.S. (and in ATL, specifically), and since you make reference to U.S. tax code, I'll assume that you're looking for U.S. anecdotal advice.
First of all, it does make a difference whether you choose to organize as a non-profit or a for-profit, in that, as a non-profit, you are never going to have an equity structure (stock, partnership, dividends, tax pass through, etc.) So, in Georgia, if you apply for a non-profit corporate charter, you won't have the obligations of for-profit reporting to the State you'd otherwise incur, and you won't need to register securities, etc. Sounds to me like there is no question you should organize in Georgia as a non-profit, unless you actually do intend to run this as a business from the outset, and will have investment to manage.
My second thought is that, as a very small group, it would be in your interest to see if there is some other like-minded, but already chartered non-profit group within whose framework you could readily operate for the next couple of seasons. That would free you from the approximately 100 hours of work it is going to take you in the next year to do the non-profit incorporation, hold required board meetings, report the minutes of those meetings, set up bank accounts, do the books, file for tax exempt status, and file a tax return. Unless you are gungho to learn about non-profit organization by doing it, you could better spend the time on developing your creative vision, and putting on productions.
My third thought is that Atlanta has some first rate not-for-profit arts organizations, and I wonder if you've talked with any of them about your issues? In particular, I'd recommend you contact the good folks at The Shakespeare Tavern for advice about organization and fund raising.
posted by paulsc at 2:07 AM on May 15, 2006
First of all, it does make a difference whether you choose to organize as a non-profit or a for-profit, in that, as a non-profit, you are never going to have an equity structure (stock, partnership, dividends, tax pass through, etc.) So, in Georgia, if you apply for a non-profit corporate charter, you won't have the obligations of for-profit reporting to the State you'd otherwise incur, and you won't need to register securities, etc. Sounds to me like there is no question you should organize in Georgia as a non-profit, unless you actually do intend to run this as a business from the outset, and will have investment to manage.
My second thought is that, as a very small group, it would be in your interest to see if there is some other like-minded, but already chartered non-profit group within whose framework you could readily operate for the next couple of seasons. That would free you from the approximately 100 hours of work it is going to take you in the next year to do the non-profit incorporation, hold required board meetings, report the minutes of those meetings, set up bank accounts, do the books, file for tax exempt status, and file a tax return. Unless you are gungho to learn about non-profit organization by doing it, you could better spend the time on developing your creative vision, and putting on productions.
My third thought is that Atlanta has some first rate not-for-profit arts organizations, and I wonder if you've talked with any of them about your issues? In particular, I'd recommend you contact the good folks at The Shakespeare Tavern for advice about organization and fund raising.
posted by paulsc at 2:07 AM on May 15, 2006
When I was looking to do the same thing with a few theatrical collaborators, we decided to actually sign on with an umbrella organization that allows donors to make tax-deductible donations to us as though we were a 501(c)(3)(kind of like what paulsc suggests -- teaming with an existing group). We currently work with Fractured Atlas here in New York, I'm not sure what similar organizations might be in Atlanta.
posted by jrb223 at 9:58 AM on May 15, 2006
posted by jrb223 at 9:58 AM on May 15, 2006
This thread is closed to new comments.
posted by Ostara at 10:17 PM on May 14, 2006