J Lutz on mon 6 dec 04
It seems that something was discussed in the last couple of years about
this but I can't find anything in the archives and I can't find that I
saved the info - so. . .
I belong to an Artists Guild which runs a gallery in part of the building
we have. It was decided (before I got involved) that they needed to apply
for a 501.c.3 designation. The IRS denied the application because of the
income from the gallery run for and by members. So now the issue is how to
spin off the gallery so as not to contaminate the Guild funds with the
gallery proceeds. It appears that we have the option of creating one of 2
different entities to take over the gallery. A cooperative or a small
business. This entity would then rent the gallery space from the Guild.
I will be trying to get information from another Co-op in the area as well
as research some of these questions through other sources.
So, my questions are:
1. It's very difficult to get information from the IRS about exactly what
qualifies for a 501.c.3 designation within our unique circumstances. We
are getting conflicting information from our attorneys and accountants.
Does anyone have any experience with this? I can't believe that our
situation is so unique that someone else hasn't been through it.
2. Can anyone shed any light on the advantages or disadvantages of a Co-op
versus creating a small business for running an art gallery? We have good
participation from the members who show their work currently in the gallery
so it would seem that a co-op would be logical. But . .?
3. Is there a source of sample documents for creating a co-op specifically
for the sale of art work? We are strapped for funds currently due to
significant roof repairs so we need to do as much of the paperwork
ourselves instead of farming it all out to an attorney.
4. Are there other questions we should be asking or issues we need to
consider? All this has hit us as at a very in-opportune time (is there any
other kind?) We are in the midst of a change of officers, our Christmas
show, and a previously scheduled gallery show. We need to respond to the
IRS by January 21 so we're all in a bit of a panic.
In an effort to try to comply with the IRS we're temporarily leaving work
up in the gallery but will be putting customers in touch with the artists
to complete sales directly so that funds won't be flowing through the guild
books. This obviously is not ideal but we don't want to completely close
the gallery and lose the momentum that's been developed over the last 2
years of operation.
Please feel free to respond to me privately if you think this is something
not generally of interest to the whole Clayart readership.
Jean Lutz
Vice President, Operations and Marketing
Mountain Artists Guild
Prescott, AZ
Les on tue 7 dec 04
Hi Judy -
I know this must be somewhat irrelevant to your situation but I thought I
would send on our Guilds situation here in Canada.
We are the Arrowsmith Potters Guild in Parksville in Mid-Vancouver Island up
here in the Great Pacific Northwest Rainforest. We have been set up as a
Non-Profit Society under our government rulings. Our home is an old
Canadian Pacific Railway Station which we have renovated over the past 7
years to a very functional teaching, educational, recreational pottery
studio. We have 8 new Pacifica Wheels, a slabroller, an extruder, 3
electric kilns and a raku kiln, glaze room, etc.
We turned the Ticket Office and Waiting-room into the Station Pottery
Gallery. Our gallery operates as a subsidiary of our Guild. It's books are
kept separately from the Guild's. It is operated by members of the Guild
who take approx. 2 days per month in the store. We have 17 working members
of the Gallery who pay 20% commisions to the Gallery and we also have
another approx. 20 non-working members who pay a 40% commission.
At the end of each quarter the Gallery Manager transfers any moneys in their
account over to the Guild with the exception of funds needed for the
operation of the Gallery. As you can seee, this is also a non-profit
situation and it is working like a charm.
I hope you get your situation sorted out. I am sure there is a very simple
answer to it all.
All the Best of the Season to Y'all,
Les Crimp.
lcrimp@shaw.ca
----- Original Message -----
From: "J Lutz"
To:
Sent: Monday, December 06, 2004 1:06 PM
Subject: Guild/Gallery - non-profit questions
> It seems that something was discussed in the last couple of years about
> this but I can't find anything in the archives and I can't find that I
> saved the info - so. . .
>
> I belong to an Artists Guild which runs a gallery in part of the building
> we have. It was decided (before I got involved) that they needed to apply
> for a 501.c.3 designation. The IRS denied the application because of the
> income from the gallery run for and by members. So now the issue is how to
> spin off the gallery so as not to contaminate the Guild funds with the
> gallery proceeds. It appears that we have the option of creating one of 2
> different entities to take over the gallery. A cooperative or a small
> business. This entity would then rent the gallery space from the Guild.
>
> I will be trying to get information from another Co-op in the area as well
> as research some of these questions through other sources.
>
> So, my questions are:
> 1. It's very difficult to get information from the IRS about exactly what
> qualifies for a 501.c.3 designation within our unique circumstances. We
> are getting conflicting information from our attorneys and accountants.
> Does anyone have any experience with this? I can't believe that our
> situation is so unique that someone else hasn't been through it.
>
> 2. Can anyone shed any light on the advantages or disadvantages of a Co-op
> versus creating a small business for running an art gallery? We have good
> participation from the members who show their work currently in the
> gallery
> so it would seem that a co-op would be logical. But . .?
>
> 3. Is there a source of sample documents for creating a co-op
> specifically
> for the sale of art work? We are strapped for funds currently due to
> significant roof repairs so we need to do as much of the paperwork
> ourselves instead of farming it all out to an attorney.
>
> 4. Are there other questions we should be asking or issues we need to
> consider? All this has hit us as at a very in-opportune time (is there
> any
> other kind?) We are in the midst of a change of officers, our Christmas
> show, and a previously scheduled gallery show. We need to respond to the
> IRS by January 21 so we're all in a bit of a panic.
>
> In an effort to try to comply with the IRS we're temporarily leaving work
> up in the gallery but will be putting customers in touch with the artists
> to complete sales directly so that funds won't be flowing through the
> guild
> books. This obviously is not ideal but we don't want to completely close
> the gallery and lose the momentum that's been developed over the last 2
> years of operation.
>
> Please feel free to respond to me privately if you think this is something
> not generally of interest to the whole Clayart readership.
>
> Jean Lutz
> Vice President, Operations and Marketing
> Mountain Artists Guild
> Prescott, AZ
>
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