June 27, 2000

In a city full of cell phones, SUVs, IPOs and venture capital, the nonprofit model is an intriguing alternative to business as usual.

Nonprofit status relieves some of the commercial stresses of the art biz, and allows -- in fact, requires -- galleries, collaborative workspaces and art service organizations to frame their efforts in the context of community service.

Advantages
Like any business, a nonprofit gallery or art service organization will need to generate revenue and publicize its efforts. A nonprofit can retail goods and independent artists get commissions on the work they sell.

Pullquote template can't be opened. The difference is that a nonprofit is exempt from state and federal corporate income tax, and enjoys other tax exemptions and benefits. Nonprofit status also deflects some liability away from the founders, board members and staff.

The process of becoming a nonprofit is exhausting and lengthy. There are lots of legal hoops to jump through and oceans of paperwork to fill out. But once these obstacles are overcome your project will have lasting, solid legal status plus a clear vision and purpose. That's the foundation of a thriving community-based art scene and economy in San Francisco.

Restrictions
A nonprofit must dedicate itself to public benefit or educational ends. It cannot endorse a candidate for public office or an initiative or piece of legislation and it cannot offer stock or dividends to boardmembers, staffers and investors. If the nonprofit dissolves, its assets must go to other public groups, not to individuals.

Getting nonprofit status
The first step is to incorporate your project as a nonprofit with the secretary of state of California. This defines the legal entity and establishes a specific mission and vision. The second is to apply for tax exempt status with the IRS as a 501(c)(3) organization.

If you do it yourself, be prepared for a lot of study and reading. Paying for a lawyer gets quicker results, but will most likely cost a fair amount of money -- maybe even several thousand dollars.

If you lack the funds to pay for a lawyer, you may be able to get free legal aid through the Bar Association of San Francisco's Volunteer Legal Service Program, California Lawyers for the Arts, or through your own tenacious solicitation of individual jurists.

Regardless of your choice, you will want to read How to Form a Nonprofit Corporation in California, by Anthony Mancuso (Nolo Press, 1999; nolopress.com). It's about as clear an explanation as you will find of the intricate and arcane legal process of establishing nonprofit educational/public benefit groups, religious organizations and charitable foundations. All the forms are included. Now all you need is to be extremely patient and resourceful.

Ways & means
Draw up a mission statement, collect a board of directors -- odd numbers only, at least five and it helps if they are like-minded -- along with an employer ID number and a set of bylaws. Use the sample bylaws that come with the Nolo Press book.

Your boardmembers should be people you trust and work well with, and who can contribute professional skills, volunteer energy and networking.

It's also a good idea to have a business plan. You don't need to throw down dollars on fancy software or consultants to get one. Visit the website listed at the end of this article to find a good outline -- cut and paste it into your word processor, then replace the generic headings with a few sentences or paragraphs of specific information about your project. Try to be as clear as possible. Use mission-positive rhetoric and plug your concept, but don't make it too dense. Provide specific examples. Always, always proofread your documents, or get someone to do it for you.

You'll need a budget. You are a cultural and social entrepreneur, after all. Draw it up to include expenses and revenues. If you don't have any money, include fantasy items you are going to fundraise for, as well as projected income.

Work towards it
Donations made to a project that has not yet gotten 501(c)(3) status are retroactively tax-deductible once that status is achieved. Remember that in addition to all that paperwork you also actually have to build your project. Start your newsletter or website. Put a gallery in your garage, offer classes on weekends, start a program that gets your artist pals into classrooms doing presentations, or that hooks up disadvantaged kids with working artists who need studio assistants.

Fundraise. Schmooze it up. Brainstorm. Create a press list and send out publicity mailings. Get volunteers. Lead by example. Have a benefit concert or auction. Build something that will satisfy a need in the community and acquire a life of its own.

NONPROFIT RESOURCES

Sample business plan (adapt for nonprofits):
Small Business Administration
http://www.sbaonline.sba.gov/starting/getting.html#bplan

Operations & service:
Compass Point Nonprofit Services (SF)
http://www.compasspoint.org/

New Nonprofit Nexus
Jennifer@art.net

Lawyer referral and advice:
Bar Association of San Francisco
http://www.sfbar.org/vls/free.html
(415) 989-1616

California Lawyers for the Arts
http://www.calawyersforthearts.org/
(415) 775-7200

Business resources:
Nonprofit incorporation:
Secretary of State, CA
http://www.ss.ca.gov/business/corp/corp_artsnpinf.htm

Employer ID:
Internal Revenue Service http://www.irs.ustreas.gov/prod/bus_info/pub1635.html

City of San Francisco
http://www.ci.sf.ca.us/tax/busstart.htm

Grants:
craigslist
http://www.craigslist.org/forum.html

National Endowment for the Arts
http://www.arts.gov/federal.html

San Francisco Arts Commission
http://sfac.sfsu.edu/

Foundation Center (library of grantmakers)
http://fdncenter.org/sanfrancisco/index.html
(415) 397-0902

Rent issues:
SF Rent Board
http://www.ci.sf.ca.us/rentbd/

San Francisco Tenants Union
http://www.sftu.org/
(415) 282-6622