Filmmaking Non-Profit, Good Idea or Not?
October 17, 2024 8:45 AM   Subscribe

Looking for information on starting up a non-profit for the purpose of filmmaking, as a fact-finding mission to see if this is biting off more than we can chew.

This is sort of a "pie in the sky" thing -- as I've mentioned in the open threads, I've got a group of filmmakers that have been working together for about a year overall and have 'gelled' so we're discussing making things more official through some legal method.

One component in this is that a lot of our work is funded through small grants from various local arts organizations -- so like one short film had some funding a grant that one person got specifically for the project, plus a little funding from a different person's general-not-project-related-arts-grant, etc., and a lot out of pocket. Working collectively could give us options for funding and also the ability to keep things fair and official, but I ran this by one of the arts grant givers I know and she said that you have to be very careful how your organization is structured: a plain old LLC probably doesn't qualify for grants, but a non-profit arts organization likely would be (but also affects whether it qualifies for "artist" grants because it's not an individual).

Note that this would definitely be purely an arts organization: this is not a "we film weddings to pay the bills but make our own movies sometimes" organization, we would be focused on producing films for public release, supporting ourselves and other artists in their creative endeavors. This begs another question: if we're funding other people's projects, now does that make us a grant-giver too?

From some things I've read googling, this is also similar to how a nonprofit theater has to operate to get arts funding. So, I'm hoping that with the number of performing-arts-related Mefites and grant-related Mefites here, someone can point me to either sources to review, or their own advice on whether this would be a practical way to improve our ragtag bunch's productions or what pitfalls may make us take a step back. Thanks!
posted by AzraelBrown to Media & Arts (8 answers total)
 
Best answer: Having your own non profit is a huge PITA unless you have a highly skilled legal person on your team to guide you through the many, many pitfalls and hoop-jumping that entails. I always advise people to go for fiscal sponsorship first. That means you find an established non-profit that shares or is aligned with your charter, who brings your team on as a subsidiary project. You get to use their EIN and tax exempt status, and they deal with the legal and financial financial stuff for you. They will usually take a small percentage of donated funds and grants to cover their administrative work for you.

Once you've grown and are securing enough additional funding for your own admin and legal staff, you could consider becoming your own non-profit, but not until then.
posted by ananci at 8:57 AM on October 17, 2024 [7 favorites]


Are you in the USA or Canada or somewhere else?
posted by sixswitch at 10:29 AM on October 17, 2024 [1 favorite]


Response by poster: Sorry -- USA, primarily the state of Minnesota.
posted by AzraelBrown at 10:30 AM on October 17, 2024


Ok. Canadian public granting agencies will usually support an “ad hoc collective” and these often bootstrap into non-profit orgs. I doubt that’s the case in the states.
posted by sixswitch at 10:35 AM on October 17, 2024 [1 favorite]


Best answer: Also recommend a fiscal sponsor instead of setting up your own 501c3. As ananci says, it can be a huge operational and administrative burden to do all the things you need to do to maintain your status. This is a good link that has more resources and info: https://fiscalsponsordirectory.org/
posted by something_witty at 2:30 PM on October 17, 2024 [1 favorite]


nolo makes books about various topics like this (one on starting a nonprofit is linked). how about a b corp? [wiki]
posted by HearHere at 7:01 AM on October 18, 2024 [1 favorite]


Best answer: I agree about finding a fiscal sponsor. In Chicago, groups like Chicago Filmmakers and the Independent Film Alliance act as fiscal sponsors. I don't know if there are groups closer to you. They are the non-profit that the grants or donations flow through, and they take a small percentage off the top. In exchange, you don't have to deal with the issues of being a non-profit.
posted by MythMaker at 1:45 PM on October 18, 2024 [1 favorite]


Best answer: My employer is not an arts organization, but I do manage operations for a 501c3.

The thing about running a nonprofit is that you have all the responsibilities of running a business, PLUS all the responsibilities of proving and maintaining your status, PLUS the bonus difficulty of doing all of this with never quite enough money. Aside from not having to pay income tax on their revenue, nonprofits are basically governed by all the same business/employment/compliance laws as other employers of similar size. If you don't want to go the fiscal sponsorship route, the question I'd ask you is: Who will be responsible for administration, and can you afford it?

The sub-questions in that big question are things like:
Who will map a funding strategy and get that funding? Who will be responsible for making sure each grant's funding only gets used per the terms of each agreement, and then collecting the data required by funders, and then filling out the grant reports about how that funding got used?*

Who will manage the bank account(s) and the bookkeeping? Who will keep an eye on cash flow and be able to distinguish between scrappy and almost defunct?

Who will figure out what kind of insurance you need to maintain, and how much, and then stay on top of updating coverage and paying premiums?

If you're making films, how will you obtain and fund and secure data storage, and who owns/handles licensing, and what happens to those materials if the nonprofit closes up shop?

Will you have or be employees? Who will verify employees and keep/update/discard employment records and administer PTO or parental leave and ensure compliance with employment laws? Who will make sure that payroll is complete and correct and compliant and that all the right agencies get their payments and reports on time? If there's an employment dispute, who will counsel you about it, and how will you pay them?

What's your decision-making framework? What's your governance model? How do you handle a disagreement about a major decision?


A lot of nonprofit founders (including the one who founded the org I work at now) prioritize mission work over admin work, and a lot of funders incentivize this because they hate overhead. But overhead is what keeps you from breaking the law**. It keeps toner in printers and accounting ledgers in order and social media pages up to date. Overhead is secure email and file storage and working phone lines.

Tl;dr: A mission needs a business plan.

I promise I'm not trying to rain on your parade here - I'm very happy to work at a place that cares so much about the work we do and the people we serve. But there are a LOT of practical considerations involved in starting a nonprofit and you don't want to discover them the hard way.

*I have no experience with the kinds of grants that funders give to a single filmmaker, but many grants my org has received have come with strict rules about what they can be used for and how much and what kind of documentation we're required to present. (Grantor requirements are a whole subgenre of humor on Nonprofit AF.)

**I'm not talking grand larceny here; lots of bureaucratic oversights are technically violations of law, and there is a surprising volume of law to keep track of.

posted by Fish, fish, are you doing your duty? at 2:17 PM on October 18, 2024 [1 favorite]


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