I’m gonna say, assuming this is something that can happen with the right structure and no repercussions on DMS, I’m personally still VERY iffy about spring for me the more I think on it.
While I deeply appreciate the effort at schedule accommodations, I don’t feel comfortable if the schedule were based on my feedback because I won’t know until much closer if it’d be ok for me to squeeze in my schedule to participate.
I think given that just THINKING about adding something on purpose that time of year when my schedule is white-knuckled as it is…just the thought is making me feel squidgy and stressed. I’ve learned to listen to my instinct on stuff and my instinct is telling me to pass on this for the spring. Sorry.
I will look over those and I may get someone with more legal knowledge
to guide me,
What I do know is that there are literally thousands of 501 C 3s
that sponsor art/craft shows all over the US, One can start
with looking at the Dallas Craft Guild, .
I will have to look thru some records to find other 501 c 3s that hold shows
Also the SCA is a huge 501c 3 that has vendors at most event, and
at some events their will be well over 100 vendors. I have not read
an event in quite a few years, but I don t remember any special things
we had to , That may have been done at the national or state level
I believe that both Project A-Kon and Dallas Animeefest are also
501 c 3s
Is this the part that you are concerned about
I know this is from a summary, just trying ot
narrow down the area to look at
The law states that any corporation, fund or foundation organized exclusively for religious, charitable, scientific, public safety, literary or educational purposes, amateur sports or prevention of cruelty to children and animals is exempt from taxation so long as no individual or shareholder derives a personal profit from the operation of the organization
Generate personal profit or any other benefit for individuals, shareholders
Robert, I would really rather not have to dig through pages
legalize to guess what your concern is,
Could you please point out the area of concern to us
We should be ale to ask our CPA about it
Now I see at least 3 ways a show could be set up
1)no charge at all, we just provide the space
2)We charge a small fee, maybe $5 for a table
we ask for a donation of say 10% of the sales from each person
There is no way that any of those could be seen as members deriving
a personal profit from the operation of the organization
Note the word operation there, the craft is not a part of our operation
we have member charging for classes that include a fee above the
material costs for that class. How is that different?
If member A makes some signs on the laxer and sells them to raise
money for his kids little league team or if member B makes some
costumes that they sell at A Kon or if member C sells the work they
make at the spae on Etsy, that is jsut the same,
DMS can make money. We can donate our work for sale to benefit DMS, But as a non-profit, using a DMS-owned tool to earn a personal profit is enurement, and not allowed. So, a show featuring goods that were made at DMS, where the makers receive the money, would be a no-no.
Do bear in mind, if the IRS were to decide we were in violation of our 501, it isn’t an esoteric violation. They can look at officers, or even members personal financial records, to support whatever determination they make.
Carienn - Its not really running a show under the auspices of DMS that’s a problem. It’s that the goods for sale were made on our tooling, that causes the issue.
The craft may not be part of the organization per se, but the practice of the craft using our assets sure is.
With respect to the honorariums and class fees, so long as the wages are duly reported to the IRS, the law permits us to reasonably compensate individuals for their time and expenses. Note that whether an expense is reasonable, is solely for the IRS to judge.
Member A - Non-profits can contribute funding and resources to other non-profits, so long as this arrangement has been approved by resolution of the Board (our only real way of officially approving the transfer). Member A cannot, however, make the money and donate it without official endorsement, and still claim the NP-NP transfer exemption.
Members B and C are using DMS assets to make money for themselves, and this would be considered enurement, and subject both DMS and the Member to revocation and/or collection.
Non-profit really does mean what it says - nobody profits. But we receive a lot of benefits from that status.
CA folks can’t have a “bake sale” because they used DMS gear to make said craft items…BUT
Those folks that makes things for profit from the wood shop, machine shop, lasers, etc can & do sell those items and profit - and that’s OK ?
To skirt the IRS - CA /wood turners etc could have something along the lines of a “show and tell” event without the word “sale” and then accept donations for their wares?
I don’t have a dog in this hunt at this point but I will throw this out in case anyone cares to investigate further.
I used to work in the craft guild office, which I’m pretty sure has the same non-profit educational status. It has held a craft show for many years in the fall and now spring as well I think.
A couple of possibly relevant details:
–items were often (most) made using the equipment at the guild, and at least majority of entries under mediums taught (this showcasing classes and skills taught)
–structure/logistics was that the money was collected at central point by the office (I can detail more how this worked but doubt relevant to current conversation), percentage of artists’ sales kept by the guild (sale space is paid by combo of entry fee, percentage of sales, and “volunteer” hours during show). The balance of total sales after percentage removed then remitted to artist by check a couple weeks(?) after the show.
I’m not even suggesting that if this went forward that it model the structure above. More just relating how I’ve seen it done at a similar non-profit educational space.
I have no idea that perhaps there’s some subtle difference in the type of organizational set…BUT if they are the same kind, they have found some way to satisfy the IRS requirements without endangering their status. And they were equally beyond as paranoid and careful about their status as we are
My thought on things is always to err on the side of conservative rather than endanger a great place. It sounds like this needs a lot more research.
But if someone cared to investigate more to see what the craft guild did to make things happen without endangering status this might be a source to start with.
The Dallas Craft Guild is a 501 c 3 organization, just like we are
I believe that the 500 inc, the used to put on Artfest was the same, It
benefited the performing arts in Dallas. I know that some off the shows we
have applied for are also.
First We should ask our CPA about this,
I hope that it is permissible for me, but I intend to post this question on Talk
to see if we have any lawyers that can shed light on it.
IANAL, but I think you provided your own answer. In Goldsboro Art League v. Commissioner of Internal Revenue, the court found that the corporation was entitled to exemption … [because] the corporation’s sales activities were incidental to its other activities and served the same overall objective of art education".
I believe that is a misinterpretation of the rules. We can t
take the income the space generates and divide it up
for the members
How is using a sewing machine to make a costume to sell
any different than learning say laser skills and then using
those to get a job.
Now we are not talking about someone abusing the privileges
of the space to go int heavy production. ie, a member pays
the fees for 4 other folks then they come and take all the
machines and sew for 8 hours a day Now I do not know if
that would violate our status or just the rules we have,
I just thought of something else, a member uses the lift and
tools to do a brake job on their car, that saves them money,
What if offer to do the same for you sisters car and she pays
you some money for it?
And I think this is a winner, We may need to do the sale on Thurs night or have an open house when we do it, so that it is showing folks what
can be done at the sites and not everything will be , Tim has taught bookbinding at the space but he does not make most of the
then there. I will do some of my metal work at the space but then I finish it at home
I do agree with you that I don’t believe this one event will make or break our 501C3 status but in the case you cited they were initially denied there 501C3 status over this event and only after appeals they proved it was incidental to its other activities.
My position is why take the risk
Case Study from the IRS on this topic that goes over this exact case.
Looking at that, I am first struck with the date on it
It is from 1982 and it involves cases around 1980 and one was
still under appeal at that time. I would like to see something
more recent. It would be quite reasonable for there to have
been changes in tax law and in the code for non profits since
then. In fact it looks like there were changes in non profits in
199.
We need something more up to date.
Now to what seems to be some pertinent excerpts
What would be the result if the art appreciation league sold art
works created by professional artists as a primary activity? What if the nonprofit
theater group decided to produce an ostensibly “commercial” theatrical event such
as “First Monday in October?” These are not hypothetical questions, but real
situations
The Tax Court disagreed with our denial of exemption and found that the
purpose of the art gallery and art market is primarily to foster community
awareness and appreciation of contemporary artists, and to provide a constant flow
of art for students to study art and painting techniques.
I post that part for discussion, now the there several parts of
the Greensborw case that are not a part of what was proposed
We don t have a jury process–we may need to have one of some
sort. All believe all the shows I am thinking about have some sort
of one, to make sure that no one is putting out a
bunch of buy/sale items (this is a Major problem at many shows–
ever been to a show and seen some folks selling watches in
wooden cases? They are made in a factory in South America)
We can use FB pages or even someones persona Pintinte
post for the pictures, it would not have to be fancy, I think
we could either find some artists outside the space or do it
in house
What I think is important is that the sales would not be our
major source of funds and that the sale be open to the public
do it can also be educational,
I am fairly sure that the average person thinks of things
like the 3 D printer and laser cutters to be either geek
toys or industrial tools, Now we know both can be use
for art. A sale is another way to get that message out,
and it can extend past the folks that come, Say someone
buys a neat laser cut art piece that they hang in their
home, and when a friend asks them about ti the tell them
that it was cut on a laser at Makerspace, Education
I do not want to jeopardize our status that is why I am
willing to find the the sources we need. Now we
may need to have a member of the board visit with a
lawyer. And I understand that we can not spend
thousands of dollars on a consultation, I think I can
find the advice I need for a fraction of that .
but I will throw this out in case anyone cares to investigate further.