Finance in the Arts Final

There are many ways in which new businesses can find funding. For the non-profit sector, there is the traditional 501(c)(3), the new L3C, or fiscal sponsorship. For a for-profit business, there many small business loans available through banks, or you could ask individuals to lend you money, with the pretence of paying them back when your company starts to make a profit.

The 501(c)(3) model is the traditional non-profit charitable organization. According to www.investopedia.com, it is described as a corporation, fund or foundation that operate for religious, charitable, scientific, literary or educational purposes. These organizations are exempt from taxes from the IRS (http://www.investopedia.com/terms/1/501c.asp), and are operated by donations of which the donor can take off his or her taxes. 501(c)(3) organizations are governed by a board of directors, which must have at least 3 members, who oversee the policies of the organization, and who are in charge of hiring a staff to run the day-to-day operations. 501(c)(3) organizations are able to apply for government funded and private grants, which are a great source of funding for both general and specific projects. L3C's, or low-profit limited liability companies, are a legal form of business entity in the US, which was created to bridge the gap between non-profit and for-profit investing by providing a structure that facilitates investments in socially beneficial, for-profit ventures. The point of this new structure, which can only be formed in the states of Michigan, Vermont, Illinois, Wyoming, Utah, Louisiana, North Carolina, and Maine, is to create a more modern approach to the governance of charitable institutions, while making it easier for them to make a small profit. This system was also created because it is very hard and complicated to form a 501(c)(3). It makes it much easier and faster to start up a charitable company. The last option for a non –profit to establish funding is a fiscal sponsorship Fiscal sponsorship is when non-profit organizations offer their legal, and tax-exempt status to groups engaged in activities related to the organization's missions. It typically involves a fee-based contractual arrangement between a project and an established non-profit. In this case, a company like fractured atlas, at http://www.fracturedatlas.org/ would take a small company under their umbrella and any donations made to fractured atlas with the purpose of supporting the small company would go to that small company, and the donation would be tax free to the donor. In most instances, the smaller company pays a small percentage to the large company for using their tax-exempt status. Fractured Atlas, which is known for its fiscal sponsorship opportunities, has thousands of sponsored projects under their umbrella. They can all be seen at http://www.fracturedatlas.org/site/fiscal/?do=browse_projects&letter=A.

If the for-profit