Project Create

the biography of a nonprofit

Archive for the tag “financial risk”

Does Nonprofit Mean No Profit?

I have had a lot of people asking me why I am starting a nonprofit organization rather than a for-profit. The most common questions have something to do with how nonprofits stay in business, and more importantly, how  I will pay my student loans, which are depressing to say the least. These are great questions, and ones I have definitely had to consider myself.

While everyone knows nonprofits exist, there are a lot of misconceptions about what they do and how they operate. The biggest misunderstanding is that “nonprofit” means “no profit”. To shed a little light on what a nonprofit actually is, here are a few differences between nonprofits and regular businesses from

  • When you start a business, it is for the financial benefit of its owners and/or shareholders. Profit is the goal and the business pays taxes on that profit.
  •  A nonprofit entity has a mission that benefits the “greater good” of the community, society, or the world. It does not pay taxes, but it also cannot use its funds for anything other than the mission for which it was formed.
  • Nonprofit organizations can and do make a profit, but it must be used solely for the operation of the organization or, in the case of a foundation, granted to other nonprofit organizations.
  •  When a for-profit organization goes out of business, its assets can be liquidated and the proceeds distributed to the owners or the shareholders. When a nonprofit goes out of business, its remaining assets must be given to another nonprofit.

There are many ways that nonprofits operate just like a regular corporation. For example, a nonprofit is also controlled by a board of directors. It is the board’s responsibility to ensure the nonprofit is fulfilling its mission, whether this is through direct action or supervision over an executive director.  

Another important similarity is that nonprofits can, and commonly do, have paid employees.  I won’t go into the politics of how much (or little) salaries should be, but they generally vary based on location, mission, and operating budget. For example, in an art nonprofit with an annual budget of $100,000, it would not be proper for a salary of $50,000/year. Also, while the major benefit of 501(c)(3) nonprofit status is that the company itself is not taxed on income, paid employees pay income taxes just like everybody else.

I know this is only a brief explanation, but I hope this helps clear up any confusions about how a nonprofit operates. My friends (and parents) can now rest assured that I am not signing up for a life of servitude without recourse. I don’t plan on becoming a millionaire through Project Create, but I certainly plan on being able to eat!

Bartering for Art?

I think it is safe to say that one of the major inhibitors of creative expression is money. Art supplies are expensive and being a full time artist can certainly be a financial risk. Without a guaranteed return on investment, not a lot of people (including myself) can afford to create art without sacrifice.

When I was in high school I was lucky enough to have a job, but most of that money was spent on clothes (I had a misplaced obsession with turtlenecks back in the day), gas, and diner food with my friends. Not a lot was left over to spend on art supplies. This is one of the reasons why Project Create will be so valuable to New Orleans. With resources available for free to students and elderly, a huge portion of the New Orleans community can create art without worrying about the financial burden.

As Project Create develops, I am constantly thinking of new ways to benefit the “struggling” artist, financially or otherwise. I came across an article in the Huffington Post about a hospital in New York that exhanges healthcare for creative talent that reads:

Got talent, but can’t afford a visit to the doctor? A new program at the Lincoln Hospital in the Bronx is offering a unique healthcare option for uninsured artists and entertainers in exchange for their creativity.

Applicants will go through an interview process to demonstrate their work:

The process is quick and friendly. It is designed to assess what area of the hospital would be best suited for your artistic abilities, and it gives you the opportunity to learn more about this program.Executive Director Iris Jimenez-Hernandez explains the program, “We have a large artist community in the Bronx and northern Manhattan who often go without care. This (program) will change that and it allows artists to give back to their local community.”

Once artists are enrolled, they will be required to work with hospital staff on various tasks such as performing for hospital events and helping with creative art programs to help ailing patients.

For each hour worked, individuals earn $40 of healthcare which can be used on a range of services including doctor visits, emergency care, and even surgery procedures.

Renata Marinaro of the Eastern Region for the Actors’ Fund said artists generally make an annual salary of $24,000 and therefore, “They can’t afford that kind of money and they need to get their health care and this is an excellent way for them to get that health care and contribute to the community.”

The program, which started on Monday, comes at a time when the city’s jobless rate continues to rise. In December, it was reported that New York’s rate rose to 9 percent, with the private sector adding only 38,900 jobs in 2011.

Isn’t it great to find other people fighting the good fight? While Project Create has no intentions to offer healthcare to artists, this program does inspire some good ideas. Right now we are looking to encourage local artists and art students to volunteer, because volunteering has it’s own benefits. But the possibility of teaching a class in exchange for supplies is definitely something to think about. 

Do you have any ideas about how Project Create can make art less of a financial risk?

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