For-Profit vs. Non-Profit

Yesterday’s NY Times Business section pointed out a growing trend: individuals launching for-profit companies which aim at curing social ills. This had me thinking of artists and arts professionals who think of the nonprofit model as the only viable structure from which to launch art projects or art spaces.

It seems quite obvious that post-September 2008, it is increasingly more difficult for existing nonprofit organizations with established charitable histories to raise funds, so it wouldn’t make much sense to start a nonprofit organization. The NY Times article is fair in pointing out the pros and cons of each, depending on the mission of the nonprofit organization. However, aside from the benefits of tax-exemption (including in some instances tax-deductible donations), it makes very little sense for artists and some arts organizations to initiate a nonprofit corporation. Among the stumbling blocks in forming a nonprofit are filing time frames (5 to 12 months) for nonprofits; lack of ownership (tangible and intangible property complications); limited (or no) control by founder; organizational history in order to procur certain foundation grants (some require a 3-year operationa history); business limitations governed by organizations charitable mission (nonprofits can only “do” what their mission statement expresses); and in general, limited salary ranges.

There is a need for nonprofit organizations, primarily for those that have at the crux of their vision a desire to intervene in and change public needs. Artists and arts organizations should analyze whether or not this is the proper structure for their vision and their financial future. One other viable option is of course the fiscal sponsorship model.