A good question. The answer has nothing to do with the obstacle to success. It’s only a symptom.
I can see why you’d ask that question.
It has been a key point in this column to bring out into the open the fact that Section 501(C)(3) of the Internal Revenue Service’s tax code does not include the production or exhibition of art as a tax-exempt activity.
Normally, I would hyperlink some phrase to the tax code, but after all these references, if you haven’t seen it by now and you’re a regular reader, you either trust my research (thank you), you already knew that (and are thinking about doing something about it), or you’re trying to figure it out (good luck to you – call me if you need help).
If you haven’t read it and you lead a 501(C)(3) organization that presents the arts as its major activity, you’re either in for a surprise (if you decide to read it now) or you’re choosing not to comply with the law of the United States of America (insert Sousa march here).
The absence of the arts in the series of relatively specific items catalogued as tax-exempt activities in the IRS code is not a mistake, either of commission or omission. It’s not as though the code were just written, after all.
Section 501(C) of the tax code was enacted as a result of The Revenue Act of 1954. 1954 predates the founding of almost all nonprofit arts organizations currently doing business, and the ones it does not became subject to the code if they were founded any time after 1939, only 26 years after the enactment of the 16th Amendment to the Constitution, establishing Congress’s right to impose a federal income tax.
History lesson aside, there have been ample opportunities to amend Section 501(C)(3). In fact, the section has been amended several times. In no amendment, however, did they choose to include arts production and exhibition as a tax-exempt activity.
Here’s the big “however.” Ready?
HOWEVER, THE INCLUSION IN THE TAX CODE WOULD NOT SOLVE THE PROBLEM OF ARTS NONPROFITS GOING BELLY-UP.
The problem with arts organizations going under is not the tax code. It’s not the activities. It’s not the programming. And it’s not even the innate value of art to make one’s life have some context or meaning. Art itself has little to do with why arts organizations are going belly-up like so many ducks in a shooting gallery.
The one thing that will distinguish you, both as a human being and as the leader of a nonprofit organization, is measured not by the work done, is the impact you’ve achieved. In fact, it is the only thing that makes it worthwhile. Even artists in for-profit companies get that.
Recently, reader Chris Barton sent me a note referencing an article in the Hollywood Reporter. In it, Taylor Sheridan (creator, producer, showrunner, and writer of all the various Yellowstone programs currently keeping Paramount+ afloat) talked about what it means to be impactful:
Asked if he cares about winning the respect of his industry peers, Sheridan tells the backstory of his movie Wind River, which highlighted a grossly unjust law enforcement loophole.
“[Wind River] actually changed a law, where you can now be prosecuted if you’re a U.S. citizen for committing rape on an Indian reservation, and there’s now a database for missing murdered Indigenous women,” he says. ‘So keep your fucking award. Who’s going to remember I won an award in 10 years? But that law had a profound impact. All social change begins with the artist, and that’s the responsibility you have.”
If all social change begins with the artist, it’s not the art that causes the betterment of society. That would be an unfair damnation of the artist and the art as providing a by-product that helped the community. It also damns the community as being worthy only of circumstantial progress, not intended (and therefore, permanent) betterment. The example of the latter has been evident in the diversity, equity, and inclusion community for ages.
The opera community, which claims diversity for casting Asian artists, actually has a horrific record of casting Asian artists in anything but Madama Butterfly, which, ironically, was written by a white European, who also wrote Turandot. Two wrote The Mikado. Pacific Overtures was written by three white American men and requires a full Asian cast. Almost no one produces it. Although they still produce South Pacific, written by three white American men based on a novel by a fourth, which features horrible stereotypes of race and gender behavior.
So, rather than seeking to get around the IRS code (or even the outright breaking of it), in 2023 and beyond, the only way in which nonprofit arts organizations will be taken seriously as agents of positive impact in the community is to serve to eliminate or mitigate the community’s most urgent stated issues.
For years, we have discussed the arts as a method of presenting the kind of progress that can change the world without causing any harm. That’s not enough anymore. People want their nonprofits to reduce and eliminate harm. If we have discovered nothing else by living in a pandemic, in a society of great upheaval, and in a world where the last fair election in the United States might have already happened, we have learned that the stakes for the arts have become so low as to only appeal to those who don’t have to worry about it. Donors donate so that donors may attend, the most elitist system one can imagine. Is what’s happening now similar to Nero fiddling while Rome burnt? Probably… unless there’s a way for a metaphorical 2023 violin to put out a metaphorical city-wide fire. Figure out that way to do that and you’ll get all the support you need. Don’t and you won’t get any. Deservedly so.
Based in Kirkland, Washington, Alan Harrison is a writer and speaker specializing in nonprofit organizations, strategy, the arts, and life politics. His columns appear regularly in major publications. Contact him directly at alan@501c3.guru.
BIG NEWS: Alan’s new book, “Scene Change: Why Today’s Nonprofit Arts Organizations Have to Stop Producing Art and Start Producing Impact” will be published in January. CLICK HERE TO PRE-ORDER IN THE UNITED STATES. If you live in the UK, CLICK HERE.
Alan will be hosting a session on the responsibilities of Nonprofit Arts Boards for the California Association of Symphony Orchestras in August. If you’re affiliated with an orchestra in California, come join us in Riverside!
A few more copies may be made available for those booking conferences, reading engagements, and speaking engagements. Recruit your local bookstore, conference panel, or boardroom to get a visit from Alan. Let Alan know if you want bulk copies for your board!
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