Tuesday, May 17, 2011

The Autonym Redux

A fascinating article by Diane Ragsdale about a new corporate model that may just be a better fit for Under-99s.  Meet the Low-Profit Limited Liability Company:
How many organizations became nonprofit only to become eligible for gifts and grants? How many, if they might have received investments and grants but maintained partial or total ownership of their entities, might have taken the L3C route? How many feel burdened by the idea of trying to become a “permanent nonprofit institution” and would like to think about closing up shop when the raison d’être has left the building? How many arts organizations struggle to reconcile what they do with the exempt purposes outlined under Internal Revenue Service Section Code 501(c)(3)?
So how does an L3C work?  Per Wikipedia:
The L3C is a low-profit limited liability company (LLC), that functions via a business modality that is a hybrid legal structure combining the financial advantages of the limited liability company, an LLC, with the social advantages of a non-profit entity. An L3C runs like a regular business and is profitable. However, unlike a for-profit business, the primary focus of the L3C is not to make money, but to achieve socially beneficial aims, with profit making as a secondary goal. The L3C thus occupies a niche between the for-profit and charitable sectors.

Sometime ago I posted a thought exercise called "The Autonym." The idea was to somehow codify an arts anti-organization; to describe the working relationships based upon mutual respect and free will that I see between independant artists in "the real world."  Yeah, I know, crazy.  It's sort of a "Bazaar" approach, versus the "Cathedral" approach of the traditional non-profit route.  But what sort of legal structure should an Autonymic artist use?

One problem I have with the traditional non-profit route is that the driving reason behind applying for status seems to be gaining access to that great panacea, grant money.  Another, less obvious reason:  Avoiding corporate taxes.  Let's be honest.  When you are making theatre on the economic margins, the minimum California corporate tax of $500 can mean the difference between having a set or not.
So how to wrangle the legal coverage of incorporation without building a cathedral?  Fiscal sponsorship certainly is one option.  The L3C is a very interesting model as well, and one I will have to look into further.

BY THE WAY ... I found Diane Ragsdale's article courtesy of "You've Cott Mail," an email digest one of my New York compatriots turned me onto.  It's pretty awesome and worth subscribing to.  (HT Sierra Rein!)


Janice Lang said...

To get all the accurate information on L3Cs, not via Wikipedia where anyone post information- accurate or not, but directly from the people instrumental in creating the L3C and getting it passed, you should think about attending Americans For Community Developments first annual ACD Conference - The L3C A-Z, June 6-7, 2011. See http://www.americansforcommunitydevelopment.org/conferences.php for more information and to register. It's not too late.

Andrew Moore said...

Thanks for the heads up!