Americans for the Arts

James Undercofler

Perhaps the most significant and radical departure from the traditional 501(c)(3) (NFP) are the direct to consumer internet businesses, such as artistShare , Etsy, etc. In addition, philanthropy/investor sites such as Kickstarter are revolutionizing giving.

The direct to consumer businesses are organized either as limited liability corporations (LLCs) or individually-organized entities (individuals file IRS, Section C, 1040). Assessment of risk determines whether to form an LLC or not. What’s particularly interesting about these sites is their range: from those that involve “audience” in the artistic process, to those that aggregate artistic products in an almost social network sort of way. From my limited knowledge of their net revenue, I do know that some of these sites are producing significant profits to their owners/creators.

Some assert that the “new investors/donors” resulted from Hurricane Katrina and the massive earthquake in Haiti, that technology that made it easy to give small amounts through one’s cell phone. 

Adam Huttler

For decades now, the conventional wisdom has been practically knee-jerk: if you want to do your own thing in the arts, the first step is to start a 501(c)(3) corporation. I’m not sure this was ever good advice, but I’m positive it’s lousy today.

Don’t get me wrong: the 501(c)(3) model is a great choice if there are visions of marble columns dancing in your head. That’s because the rules and regulations on tax-exempt organizations are predicated on the archetype of a perpetual, quasi-public institution. Like all corporations, 501(c)(3)s by default are immortal; they are designed and expected to outlive the participation of their founders and are difficult to shutdown. Moreover, federal and state-level charity regulations are complex and onerous but generally pretty effective at preventing (or at least mitigating) abuses of the public trust. 

Prompted by a fluctuating economy and technological advances indirectly threatening to usurp the traditional live arts experience, we are at the height of buzz surrounding the possible identification of new business models for arts organizations; specifically, alternatives to nonprofit incorporation.

I agree – nonprofit incorporation isn’t for everyone. But what I feel is absent from these conversations is a real discussion on what we are striving for on the other end of these supposed magic bullet business models.

There seems to be a sense that we somehow trapped ourselves into the 501(c)(3) model. And so instead, we’re looking for alternative structures; other structures within which we can operate. That also seems limiting and honestly a little backwards to me. 

Scott Provancher

Why is it so rare to find successful examples of innovation and entrepreneurism in the arts industry in America? The arts industry, after all, is filled with creative individuals who are working in a country that idolizes the lone entrepreneur business leader (Steve Jobs, Bill Gates, Mark Zuckerberg, etc…).

After watching this video about Google Art Project and realizing disruptive innovations that could change the way we experience art are not coming from the arts industry, but from for-profit technology companies, I began searching for answers.

Though we often like to believe innovative ideas that turn into successful businesses or products happen from a solitary “eureka” in one person’s head, the fact is that they usually don’t. Organizations and individuals who successfully produce game-changing innovations have very disciplined approaches to nurture creative ideas, assemble the right minds to develop them, put the necessary financial resources behind them, and most importantly are comfortable with taking risks. 

Helena Fruscio

We can all see the business models changing – for-profits with a social mission, nonprofits with a business models that include historically “for-profit” ventures, and sole proprietors, small business owners, and entrepreneurs devising new plans, products, and businesses at a breakneck speed.

In Berkshire County, a rural community with a population of about 120,000 in western Massachusetts, we have started a movement that encompasses and supports the needs of this swiftly changing business dynamic.

It starts with the acknowledgment of the new businesses dynamic and then working to shift the focus on the core and driving values of the emerging field: Creativity. 

Jeanie Duncan

(Continued from Part 1 posted earlier this week)

Process: Constituency Research Yields Insight

As we surveyed our situation, we knew our approach could not be a typical strategic planning process. Board and staff discussion charted an outside-in strategy for data gathering. Our selected consultant was a branding, PR, and market research firm whose representatives reminded us from the beginning that “it doesn’t matter what you think. What matters is what your customer – the community – thinks.”

With the potential for change to be significant, it was essential that the United Arts Council of Greensboro (UAC) communicate openly, early, and often to the constituents who relied on our funding, as well as their core audiences and supporters. For some agencies,our investment comprised as much as 20 percent of their contributed revenue. Regardless of the percentage, the resource was critical; we wanted to mitigate negative impact while giving historically funded agencies ample lead time for planning and preparation.