Community Theater Green Room Discussion Board: Director’s Stipend for Non-Profit

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henreallen
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Topic: Director’s Stipend for Non-Profit
Posted: 1/10/05 at 12:44pm

Does anyone know California state law on giving show Directors a stipend per play if you are a Non-Profit corp?

An article in our by-laws states "No part of the net earnings of the Corporation shall inure to the benefit of or be distributable to its members, Directors, officers, or other private persons."

We started giving $100.00 for directing a show. This apparently goes against our by-laws. Can it affect our standing with the IRS as non-profit, and if so what could happen.

Personally i believe if we have to bribe someone to direct for a little bit of cash, then they shouldn't belong to our theater. Patrons come in support of the arts to make sure our community doesn't lose it's theater, not to pay for directors.

Please help me out, I want to put an end to wasteful spending.

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MPL
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Posted: 1/10/05 at 3:28pm

I know of many non-profit, community theatres where
the Director of the show is the ONLY paid position,
including set designers, lighting designers, costume
designers, stage managers, crew, actors, etc. I do
not consider this a "bribe" but as a necessary
means of doing business.
After all, aside from the stage manager, the Director
is there from auditions to opening night, at every
rehearsal, and must oversee the output of all the
above-named departments. They are responsible
for the overall look and "feel" of the production, and
they experience many sleepless nights and
frustrations trying to make their vision a reality. I can
assure you, none of the directors are in it solely for
the money, but it does encourage more
professional, more experienced and more
knowledgeable directors to take on a show if they
know their time is being compensated.
And having on board an established, professional
director helps lure designers, stage managers,
actors and others who are willing to work gratis just
for the opportunity to be part of a well-run theatrical
event.
(If the production is a musical, it is also not
uncommon to pay the Musical Director as well, for
the very same reasons, plus they are usually
responsible for recruiting musicians, rehearsing
them as well as the singers, and very often
conducting the orchestra for each and every
performance.)
If you are correctly reading your by-laws (which I'm
not sure you are) then they need changing. It should
be perfectly acceptable to pay a stipend for special
consideration. After all, you pay the electric bill and
the rent. You pay royalties (I hope!) If props or
costumes need to be rented or built, you pay for time
and materials. The fees of the director(s) should be
lumped into the front-end, overall cost of doing the
show.
If the show is successful -- good for you! The profits
for that show are then applied to the production of
the next show. They are not disbursed amongst the
cast, crew or anybody else who participated. This (I
believe) is what your bylaws are telling you. And this
must be where your confusion lies. After all is said
and done, consulting an attorney or tax professional
who is familiar with the laws of your state is always a
good idea.

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Scott B
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Posted: 1/11/05 at 3:02am

What you've noted in your bylaws is the same as just about any other bylaws that I've read ... and I've gone through a bunch. It's setup that way so no one from your group can profit from the productions. There are many, many, NPOs that pay stipends to directors and music directors. That doesn't mean they're profiting.

I suppose if everyone on your board feels the same as you do ... that it's "wasteful spending" then you should find directors that will give freely of their time. That's what a board is for.

If we could get directors for free ... ones that actually know what they're doing ... we would too. It's just that option doesn't exist for us. We're a small theatre group and routinely pay between $300 and $500 for a director. Throw in another $500 for the music director ... oh yeah the orchestra too. OUCH! We DO pay too much.

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dougb
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Posted: 1/18/05 at 12:25pm

To go back to your original question: Net earnings is the income minus expenses for the organization as a whole rather than a specific expense item. Non profit organizations routinely pay people for services provided. The IRS will not object to you paying a director a REASONABLE amount to direct a play. When your by-laws talk about the net earnings going to an individual they mean a Trustee or the Executive Director being paid some or all of the end of year earnings (profits if we were for profit organizations). This does not prohibit a bonus if appropriate.

I hear several times a year from people who want to start a non-profit organization to get grants and donations to pay themselves a salary. Most of these would not pass IRS scrutiny. If you pay director a small token compared to the total cost of the production or your total operating budget, no one is going to complain (well, someone will complain about anything). If your total budget for the year is $50,000 and you pay yourself $35,000 it is going to be looked at very closely.

The basic idea is that any earnings (profits) your organization makes must be used to further the non profit goals of your organization. For example, if your Articles of Incorporation and By-laws state that the purpose of your organization is "to provide after school theatrical opportunities for at-risk youth" and you have a great financial year and decide to buy each Trustee a new car, you might have trouble convincing the IRS or your members (if you have any) that the expenditure furthered the purpose of your organization but if you spent the money to rent a larger facility so you could involve more at-risk kids, that would clearly further the purpose of your organization.

Hope this helps.

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kingsleya
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Posted: 10/29/05 at 4:39pm

Likely, the quote you are taking from your by-laws refers to directors of the organization not directors in the theatrical sense.

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Guests
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Posted: 10/30/05 at 4:56pm

Originally posted by MPL

If the show is successful -- good for you! The profits
for that show are then applied to the production of
the next show. They are not disbursed amongst the
cast, crew or anybody else who participated. This (I
believe) is what your bylaws are telling you.

Also, the more successful your shows are (which is the whole purpose of recruiting qualified directors), the more successful your theatre will be overall. You will begin to develop a reputation for a fine night out. A great reward for a small amount!

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castMe
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Posted: 11/05/05 at 12:05am

......regarding the "bribe" comment. A hundred bucks goes a small way in covering gas, phone, and out of pocket food on rehearsal days. I work for companies that do stipend and those that don't and the ones that do, do it because they can, not because they feel they have to. If you really feel that paying directors when possible is "wasteful spending" perhaps it is you who shouldn't belong to your theatre.

Investigate. Imagine. Choose.

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tristanrobin
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Posted: 11/05/05 at 2:58pm

"Patrons come in support of the arts to make sure our community
doesn't lose it's theater, not to pay for directors.? "

Paying your directors IS one way to support the arts.

Frankly, I know theatres that don't pay directors because they can't
afford to do so - but I've NEVER known one that didn't pay because
they thought the position wasn't worth a stipend.

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Linda S
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Posted: 11/05/05 at 3:19pm

As board when we consider a production we look at the "cost of doing business". Paying a stipend for a director and music director are part of the cost of doing business. When you ask someone to take on the responsibility of a show being artistically successful the least you can do is to give then enough money to cover the gas and the babysitter. When I direct I am paid a stipend. By the time it is all said and done, with time off from work and unscheduled trips to theater, it usually only cost me a couple hundred dollars to direct a show. Yes. That is after the stipend.

Linda

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MartyW
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Posted: 11/07/05 at 8:50am

I direct for several companies.. They pay from zero to $400... Regardless of the stipend, I easily wind up at a loss of several hundred dollars in providing the "niceites" that are not always part of a budget... Not to mention the personal costs gas, food, flowers (to get me out of the dog house with my wife for spending so much time at the theater...) Stipends are not the reason I direct, but they sure help ease the pain..

Marty W

"Till next we trod the boards.."

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