Community Theater Green Room Discussion Board: Non-profit vs. for profit

Author

Message

dixie112
Walk-On
Walk-On

Joined: 12/22/08
Online Status: Offline
Posts: 0

Topic: Non-profit vs. for profit
Posted: 8/24/09 at 3:20pm

I have seen a few posts about this, but I'd like more details if anyone has them. Our community theatre has not yet gotten non-profit status and a couple of us have been trying to research the pros and cons of doing it one way versus the other. Obviously, one of the biggest pros to being a non-profit is being able to get grant money. But we would like more information from anyone out there who is not non-profit who could give us specific pros and cons to running a community theatre that way. Thanks for your help!

IP Logged

lparks
Star
Star

Joined: 1/12/10
Location: United States
Online Status: Offline
Posts: 58

Posted: 1/12/10 at 5:29am

Our company is new, so we do not yet have 501(c) status. It really depends on what you consider "non profit". For instance, we formed a "not for profit corporation" with the state. That took all of 2 days. However, if you want to be considered a "charity" by the IRS for tax purposes, you need 501 (c) status, which is a whole other ballgame ($750 app fee, 2 - 5 months wait time, etc).

There are many "props" to being non-profit with 501(c) status. Namely, you can apply for grants and all donations are tax deductable. However, even without 501 (c) status, you should not have issues getting sponsorships from local businesses. Your main thing with sponsorship is an exchange of money for advertising. As such, even if you had 501 (c) status, they would still be unable to write off the sponsorship as tax deductable; since they received something of equal value in return (advertising).

An advanage to being "non profit" in general (rather just by state or by the IRS too) is the ability to use volunteers. Most for-profit corporations will have a hard time in finding volunteers, and if you decide to pay your "volunteers" a small amount, you can actually get in trouble for not paying them minimum wage. Non-profit's to tend to enjoy more liberty in the area of volunteers and stipends, than do their for profit counterparts.

Landon Parks,
Producing Artistic Director,
Bloomington Repertory Theatre Co

IP Logged

codadiva
Walk-On
Walk-On

Joined: 4/29/09
Location: United States
Online Status: Offline
Posts: 0

Posted: 2/02/10 at 12:48am

I researched this question a year ago. Due to timing, persistence and a really cheap rent, I was able to open a "for-profit" theatre this past November. Mine is a small black box. So my experience may not be too helpful for your community theatre, depending on the size. While getting grants is possible, it's also labor intensive. A small children's theatre in the area is constantly working on grants. Finding them is one thing, writing them is an entire science.

I find that with some creativity on how to make partnerships, I don't have to spend a great deal on the budget. For example, our productions can be partnered with charities in the area. This was my way of giving back with a for profit theatre. Thinking of doing "The Guys" this fall and a portion of the proceeds will go to the Fire Department. With that, they may be able to bring in kind printing etc. However, I'm less than 50 seats.

I hope some of that was helpful.

IP Logged

godolphs
Walk-On
Walk-On

Joined: 2/19/10
Online Status: Offline
Posts: 0

Posted: 2/19/10 at 3:46pm

A nice "pro" of a 501(c) is that we were able to get a sales tax exempt status in our state and thus save money as we do not have to pay state sales tax. No income tax and we are considered a charity. All nice things in the end.

IP Logged

Running Your Theater
Community Theater Green Room Discussion Board :Theater Administration :Running Your Theater

Author	Message
dixie112 Walk-On Joined: 12/22/08 Online Status: Offline Posts: 0	Topic: Non-profit vs. for profit Posted: 8/24/09 at 3:20pm
	I have seen a few posts about this, but I'd like more details if anyone has them. Our community theatre has not yet gotten non-profit status and a couple of us have been trying to research the pros and cons of doing it one way versus the other. Obviously, one of the biggest pros to being a non-profit is being able to get grant money. But we would like more information from anyone out there who is not non-profit who could give us specific pros and cons to running a community theatre that way. Thanks for your help!

	IP Logged

lparks Star Joined: 1/12/10 Location: United States Online Status: Offline Posts: 58	Posted: 1/12/10 at 5:29am
	Our company is new, so we do not yet have 501(c) status. It really depends on what you consider "non profit". For instance, we formed a "not for profit corporation" with the state. That took all of 2 days. However, if you want to be considered a "charity" by the IRS for tax purposes, you need 501 (c) status, which is a whole other ballgame ($750 app fee, 2 - 5 months wait time, etc). There are many "props" to being non-profit with 501(c) status. Namely, you can apply for grants and all donations are tax deductable. However, even without 501 (c) status, you should not have issues getting sponsorships from local businesses. Your main thing with sponsorship is an exchange of money for advertising. As such, even if you had 501 (c) status, they would still be unable to write off the sponsorship as tax deductable; since they received something of equal value in return (advertising). An advanage to being "non profit" in general (rather just by state or by the IRS too) is the ability to use volunteers. Most for-profit corporations will have a hard time in finding volunteers, and if you decide to pay your "volunteers" a small amount, you can actually get in trouble for not paying them minimum wage. Non-profit's to tend to enjoy more liberty in the area of volunteers and stipends, than do their for profit counterparts.
	Landon Parks, Producing Artistic Director, Bloomington Repertory Theatre Co
	IP Logged

codadiva Walk-On Joined: 4/29/09 Location: United States Online Status: Offline Posts: 0	Posted: 2/02/10 at 12:48am
	I researched this question a year ago. Due to timing, persistence and a really cheap rent, I was able to open a "for-profit" theatre this past November. Mine is a small black box. So my experience may not be too helpful for your community theatre, depending on the size. While getting grants is possible, it's also labor intensive. A small children's theatre in the area is constantly working on grants. Finding them is one thing, writing them is an entire science. I find that with some creativity on how to make partnerships, I don't have to spend a great deal on the budget. For example, our productions can be partnered with charities in the area. This was my way of giving back with a for profit theatre. Thinking of doing "The Guys" this fall and a portion of the proceeds will go to the Fire Department. With that, they may be able to bring in kind printing etc. However, I'm less than 50 seats. I hope some of that was helpful.
	IP Logged

godolphs Walk-On Joined: 2/19/10 Online Status: Offline Posts: 0	Posted: 2/19/10 at 3:46pm
	A nice "pro" of a 501(c) is that we were able to get a sales tax exempt status in our state and thus save money as we do not have to pay state sales tax. No income tax and we are considered a charity. All nice things in the end.
	IP Logged

Topic: Non-profit vs. for profit( Topic Closed)