April 23, 2019; Voice of San Diego
In the United States, qualifying for and securing 501c3 status under the IRS has gotten progressively easier. But while the status has benefits, it also brings burdens of compliance at both the federal and state levels. While these may not seem onerous to some organizations, they present real challenges from time to time for new or small organizations with no infrastructure.
Such is the case for many small arts and culture organizations in California, which, in order to become a nonprofit within the state, are required to “develop articles of incorporation and bylaws, create (and answer to) a board of directors, as well as maintain extensive recordkeeping.”
In San Diego, for instance, funding from the San Diego Commission for Arts and Culture is crucial to public arts organizations, but it is contingent upon not only having official 501c3 status, but also already being in operation with three years or more of programming. Small arts organizations like Space Time are stuck in some ways: They need funds for expenses, such as renting a permanent venue and employing a staff, which could allow them to consistently have programming and write grants, but at the same time, they are cut off from many funding sources due to a lack of 501c3 status.
To counter this issue, organizations such as the San Diego Foundation’s Creative Catalyst Program and the Media Arts Center provide a dating service of sorts between individual artists and non-501c3 organizations who need a fiscal sponsor, with formal arts organizations willing to host them and act as their corporate umbrella. This support can give smaller organizations the time needed to create programming, establish an advisory council, and engage in other activities needed to meet the criteria for 501c3 status or it may simply support more temporary or longer term but less bureaucratically focused lifespans.
“I’d never recommend someone just start a nonprofit from scratch,” says Ethan Van Thillo of the San Diego Media Arts Center which provides fiscal sponsorship for some groups and individual artists. “I recommend that they have a fiscal sponsor for the first two, three years.” Then, a group could spend some time building programming and developing an advisory council (which would then become a board).
As with anything else, however, the usefulness is in the match. Make sure you do your homework to ensure that the fit is right but in San Diego you will have help doing so!—Kristen Munnelly