Chances are, you’ve heard of a nonprofit. They’re sprinkled through business fields, the entertainment industry, and charities alike- encouraging communities to unite for causes that tug on heartstrings and broaden minds. While many of us objectively understand nonprofits, many more politely smile and nod when someone brings one up. (Without really knowing what they’re nodding about)
Fear not! We’re here to define and understand nonprofits, give you tricks to help distinguish their subgroups, answer some of the most frequently asked questions, and highlight the incredible role they play in creating meaningful and emotionally charged live events. Let’s get started.
Nonprofit is an umbrella term used to describe an organization that focuses on its message rather than its money. Instead of centering on profit, they illuminate and uplift a collective dream of social, economic, or political change. Due to their cause, nonprofits are often given tax-exempt status by the IRS to pursue their mission further. There’s a Rolodex of nonprofit jargon to peruse- but the three most significant categories for live events and online ticket sales are:
Public Charities: these are foundations that operate for religious, charitable, scientific, literary, or educational purposes. (i.e., groups like Broadway Cares: Equity Fights AIDS, Musicians Without Borders, Americans for the Arts, and much more) Generous donations primarily fund them.
Social Advocacy Groups: these teams are specifically highlighting imperative social justice work. For live performances, these groups often underline the demand to dismantle ancient structures in order to diversify performers and audiences. Radical justice is crucial for the continuation and betterment of the event sphere, and social advocacy groups bring about lasting and much-needed change. (The Bowery Arts Project, Culture Push, and Broadway Black are incredible organizations to research and share with your friends.)
Private Foundations: these organizations are also dedicated to reaching a charitable goal but are typically run by a parent company (a la Fender Music Foundation, the Bill + Melinda Gates Foundation, and the Coca- Cola Foundation). Because foundations are tied to an established company, there are often able to contribute more funds to a particular cause.
Now that we’ve established some basics let’s address three of the most common FAQs surrounding the nonprofit world: What is a 501(c)(3)? Does nonprofit mean that a company doesn’t make any profit at all? Can a nonprofit have a profit division? While this language can definitely be confusing, we’re ready to help break down the rhetoric!
501(c)(3): This arrangement of numbers may bring back high school algebra anxiety, but don’t stress, we’ll break it down.
501(c)(3) is an IRA code for nonprofits dictating that it is federally tax-exempt. None of its earnings go to a private shareholder or any one individual’s pocket. 501(c)(3)s are typically charitable organizations, created to uplift voices across artistic, religious, scientific, and literary sectors. Many of its most crucial nonprofits work to end cruelty towards women, children, and animals! As they focus their attention on the public’s well-being, they are an important pillar in our society.
Does a Nonprofit Make Any Profit? Ever?: This is a bit of a misnomer. Because of their names, nonprofits are thought to be, well, non-profitable. However, creating a regular stream of income is incredibly important (and encouraged) for nonprofits to stay afloat. The primary difference between for-profits and nonprofits is where the money is going. For-profits benefit the private sector and nonprofits are built for public consumption. To better understand the details of a nonprofit’s necessary costs- check out the amazing work of the National Council for Nonprofits here.
Can a Nonprofit Have a For-Profit Division? Short answer, yes. The longer answer- it is extremely tricky to do so while maintaining nonprofit tax-exempt status. With so many of our biggest businesses taking financial hits, a lot of nonprofits are scrambling to make ends meet. More and more companies are dancing on the tightrope to serve their communities while paying their employees a livable wage. Which has been proven more necessary than ever with the aftermath of 2020. Here are two popular methods that can work (if you’re careful!):
-Form a subsidiary with a For-Profit Company: in this venture, a nonprofit is able to offer a variety of payment packages and continue out its mission, while the for-profit section takes care of the unrelated business activities. This is effective but be careful to keep the subsidiary separate from both sides of the business to avoid legal complications.
-Collaborate with a For-Profit Company: for this collaboration to be safe and effective, extensive contracts need to be crafted paying the market rate for service and production!
Complicated jargon aside, nonprofits are vital parts of our social and economic community. They are instrumental in creating a better, more beautiful world for us and our next generation. We believe in the importance of uplifting nonprofit companies to provide rich, nuanced, and necessary experiences for audiences around the world. We offer discounted rates to NPOs and are proud to partner with Stripe who also offers reduced fees for nonprofits. We invite you to come see our incredible lineup of events, available through our online ticketing systems, and if you’re able, make a contribution to the nonprofit of your choice. Here are some wonderful places to look.
We can’t wait to see you soon.