{"id":493,"date":"2023-07-18T12:01:00","date_gmt":"2023-07-18T12:01:00","guid":{"rendered":"https:\/\/www.artsjournal.com\/scenechange\/?p=493"},"modified":"2023-07-03T04:54:49","modified_gmt":"2023-07-03T04:54:49","slug":"but-what-if-irs-code-501c3-included-producing-and-exhibiting-arts-as-a-qualified-tax-exempt-activity","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/scenechange\/2023\/07\/18\/but-what-if-irs-code-501c3-included-producing-and-exhibiting-arts-as-a-qualified-tax-exempt-activity\/","title":{"rendered":"\u201cBut what if IRS code 501(C)(3) included producing and exhibiting arts as a qualified tax-exempt activity?\u201d"},"content":{"rendered":"\n

A good question. The answer has nothing to do with the obstacle to success. It\u2019s only a symptom.<\/strong><\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

I can see why you\u2019d ask that question.<\/p>\n\n\n\n

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\u2019s tax code does not include the production or exhibition of art as a tax-exempt activity.<\/p>\n\n\n\n

Normally, I would hyperlink some phrase to the tax code, but after all these references, if you haven\u2019t seen it by now and you\u2019re a regular reader, you either trust my research (thank you), you already knew that (and are thinking about doing something about it), or you\u2019re trying to figure it out (good luck to you \u2013 call me if you need help).<\/p>\n\n\n\n

If you haven\u2019t read it and you lead a 501(C)(3) organization that presents the arts as its major activity, you\u2019re either in for a surprise (if you decide to read it now) or you\u2019re choosing not to comply with the law of the United States of America (insert Sousa march here).<\/p>\n\n\n\n

\"\"<\/a>
And here we are celebrating the July 20 anniversary of the first man on the moon and all. Pitiful. (By the way, the advancement of science is considered a tax-exempt activity according to Section 501(C)(3).)<\/figcaption><\/figure>\n\n\n\n

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\u2019s not as though the code were just written, after all.<\/p>\n\n\n\n

Section 501(C) of the tax code was enacted as a result of The Revenue Act of 1954<\/a>. 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<\/sup> Amendment to the Constitution, establishing Congress\u2019s right to impose a federal income tax.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Here\u2019s the big \u201chowever.\u201d Ready?<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

HOWEVER, THE INCLUSION IN THE TAX CODE WOULD NOT SOLVE THE PROBLEM OF ARTS NONPROFITS GOING BELLY-UP.<\/strong><\/p>\n\n\n\n

The problem with arts organizations going under is not the tax code. It\u2019s not the activities. It\u2019s not the programming. And it\u2019s not even the innate value of art to make one\u2019s 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.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

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\u2019ve achieved. In fact, it is the only <\/em>thing that makes it worthwhile. Even artists in for-profit companies get that.<\/p>\n\n\n\n

Recently, reader Chris Barton sent me a note referencing an article in the Hollywood Reporter<\/a>. In it, Taylor Sheridan (creator, producer, showrunner, and writer of all the various Yellowstone <\/em>programs currently keeping Paramount+ afloat) talked about what it means to be impactful:<\/p>\n\n\n\n

\n

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.<\/p>\n\n\n\n

\u201c[Wind River] actually changed a law, where you can now be prosecuted if you\u2019re a U.S. citizen for committing rape on an Indian reservation, and there\u2019s now a database for missing murdered Indigenous women,\u201d he says. \u2018So keep your fucking award. Who\u2019s 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\u2019s the responsibility you have.\u201d<\/p>\n<\/blockquote>\n\n\n\n

If all social change begins with the artist, it\u2019s 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.<\/p>\n\n\n\n

The opera community, which claims diversity for casting Asian artists, actually has a horrific record of casting Asian artists in anything but Madama Butterfly<\/em>, which, ironically, was written by a white European, who also wrote Turandot<\/em>. Two wrote The Mikado. Pacific Overtures <\/em>was written by three white American men and requires a full Asian cast. Almost no one produces it. Although they still produce South Pacific<\/em>, written by three white American men based on a novel by a fourth, which features horrible stereotypes of race and gender behavior.<\/p>\n\n\n\n

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\u2019s most urgent stated issues.<\/strong><\/em><\/p>\n\n\n\n

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\u2019s 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\u2019t have to worry about it. Donors donate so that donors may attend, the most elitist system one can imagine. Is what\u2019s happening now similar to Nero fiddling while Rome burnt? Probably\u2026 unless there\u2019s a way for a metaphorical 2023 violin to put out a metaphorical city-wide fire. Figure out that way to do that and you\u2019ll get all the support you need. Don\u2019t and you won\u2019t get any. Deservedly so.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n
\n
\"\"<\/a><\/figure>\n<\/div>\n\n\n

Based in Kirkland, Washington, <\/em>Alan Harrison<\/em><\/a> 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 <\/em>alan@501c3.guru<\/em><\/a>.<\/em><\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n
\n
\"\"<\/a><\/figure>\n<\/div>\n\n\n

BIG NEWS: Alan\u2019s new book, \u201cScene Change: Why Today\u2019s Nonprofit Arts Organizations Have to Stop Producing Art and Start Producing Impact\u201d will be published in January. CLICK HERE<\/strong> TO PRE-ORDER IN THE UNITED STATES<\/a>. <\/strong>If you live in the UK, CLICK\u00a0HERE<\/strong><\/a>. <\/h4>

Alan will be hosting a session on the responsibilities of Nonprofit Arts Boards for the California Association of Symphony Orchestras in August. If you\u2019re affiliated <\/a>with an orchestra in California, come join us in Riverside!<\/a> <\/p>

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!<\/strong><\/a><\/p> <\/p>\n","protected":false},"excerpt":{"rendered":"

A good question, o wise nonprofit arts person. The answer has nothing to do with the obstacle to success. It\u2019s only a symptom.<\/p>\n","protected":false},"author":2,"featured_media":495,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21,40,32,29,28,18,17,27],"tags":[69],"class_list":{"0":"post-493","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-arts-and-culture","8":"category-change","9":"category-charity","10":"category-dei","11":"category-diversity-equity-inclusion","12":"category-nonprofit","13":"category-nonprofit-arts-organizations","14":"category-philanthropy-and-donors","15":"tag-501c3","16":"entry"},"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/fiddling-while-burning.jpg?fit=1786%2C1190&ssl=1","jetpack-related-posts":[{"id":1756,"url":"https:\/\/www.artsjournal.com\/scenechange\/2026\/03\/26\/dog-on-a-cold-stone-floor-or-when-nonprofit-arts-organizations-obsess-about-the-art-more-than-the-people\/","url_meta":{"origin":493,"position":0},"title":"\u201cDog on a Cold Stone Floor,\u201d or When Nonprofit Arts Organizations Obsess About the Art More Than the People","author":"Alan Harrison","date":"March 26, 2026","format":false,"excerpt":"Art is a universal good. No argument. Nonprofit arts organizations are not art, and therefore are not a universal good. No argument there, either.","rel":"","context":"In "Arts and Culture"","block_context":{"text":"Arts and Culture","link":"https:\/\/www.artsjournal.com\/scenechange\/category\/arts-and-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2026\/02\/Dog-on-a-Cold-Stone-Floor.jpg?fit=950%2C634&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2026\/02\/Dog-on-a-Cold-Stone-Floor.jpg?fit=950%2C634&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2026\/02\/Dog-on-a-Cold-Stone-Floor.jpg?fit=950%2C634&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2026\/02\/Dog-on-a-Cold-Stone-Floor.jpg?fit=950%2C634&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":529,"url":"https:\/\/www.artsjournal.com\/scenechange\/2023\/09\/05\/yes-you-do-have-to-show-your-nonprofit-tax-returns-to-anyone-who-asks-no-matter-what\/","url_meta":{"origin":493,"position":1},"title":"Yes, You Do Have to Show Your Nonprofit Tax Returns to Anyone Who Asks, No Matter What.","author":"Alan Harrison","date":"September 5, 2023","format":false,"excerpt":"The more you hide something, the more others to want to see it.","rel":"","context":"In "Board of Directors"","block_context":{"text":"Board of Directors","link":"https:\/\/www.artsjournal.com\/scenechange\/category\/board-of-directors\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/IRS-990.jpg?fit=1200%2C570&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/IRS-990.jpg?fit=1200%2C570&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/IRS-990.jpg?fit=1200%2C570&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/IRS-990.jpg?fit=1200%2C570&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/IRS-990.jpg?fit=1200%2C570&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":1056,"url":"https:\/\/www.artsjournal.com\/scenechange\/2024\/10\/15\/why-do-donors-ask-for-irrelevant-data\/","url_meta":{"origin":493,"position":2},"title":"Why Do Donors Ask for Irrelevant Data?","author":"Alan Harrison","date":"October 15, 2024","format":false,"excerpt":"Could it be that you never talked to them about your nonprofit\u2019s charitable goals and how they mesh with the donor\u2019s? Whose fault is that?","rel":"","context":"In "Arts and Culture"","block_context":{"text":"Arts and Culture","link":"https:\/\/www.artsjournal.com\/scenechange\/category\/arts-and-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/09\/Paid-admission-is-not-charitable-data.jpg?fit=1024%2C683&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/09\/Paid-admission-is-not-charitable-data.jpg?fit=1024%2C683&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/09\/Paid-admission-is-not-charitable-data.jpg?fit=1024%2C683&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/09\/Paid-admission-is-not-charitable-data.jpg?fit=1024%2C683&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":1352,"url":"https:\/\/www.artsjournal.com\/scenechange\/2025\/07\/25\/advocacy-for-the-nonprofit-arts-sector-is-currently-meaningless\/","url_meta":{"origin":493,"position":3},"title":"SUMMER RERUN: Advocacy for the Nonprofit Arts Sector is Currently Meaningless","author":"Alan Harrison","date":"July 25, 2025","format":false,"excerpt":"Lost amid a string of inside-baseball phrases and ideologies, officials have little idea as to why they would possibly fund institutions that serve themselves first. It's easy to make the case for art. For artists. For charity. But for humongous nonprofit arts organizations that still can\u2019t figure out why funding\u2026","rel":"","context":"In "Arts and Culture"","block_context":{"text":"Arts and Culture","link":"https:\/\/www.artsjournal.com\/scenechange\/category\/arts-and-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2025\/03\/mural-by-beastman-spotlight-sydenham-in-christchurch-canterbury1.jpg?fit=1000%2C467&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2025\/03\/mural-by-beastman-spotlight-sydenham-in-christchurch-canterbury1.jpg?fit=1000%2C467&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2025\/03\/mural-by-beastman-spotlight-sydenham-in-christchurch-canterbury1.jpg?fit=1000%2C467&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2025\/03\/mural-by-beastman-spotlight-sydenham-in-christchurch-canterbury1.jpg?fit=1000%2C467&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":1510,"url":"https:\/\/www.artsjournal.com\/scenechange\/2025\/09\/30\/nonprofit-arts-orgs-if-your-only-answer-is-cut-youre-asking-the-wrong-question\/","url_meta":{"origin":493,"position":4},"title":"Nonprofit Arts Orgs: If Your Only Answer Is \u2018Cut,\u2019 You\u2019re Asking the Wrong Question","author":"Alan Harrison","date":"September 30, 2025","format":false,"excerpt":"So, what is the right question?","rel":"","context":"In "Arts and Culture"","block_context":{"text":"Arts and Culture","link":"https:\/\/www.artsjournal.com\/scenechange\/category\/arts-and-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2025\/09\/image.jpeg?fit=467%2C289&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":989,"url":"https:\/\/www.artsjournal.com\/scenechange\/2024\/07\/01\/this-just-in-a-new-and-unedited-review-for-scene-change\/","url_meta":{"origin":493,"position":5},"title":"This Just In: A New (and Unedited) Review for \u201cSCENE CHANGE\u201d","author":"Alan Harrison","date":"July 1, 2024","format":false,"excerpt":"\"It clearly comes from a place of love for the subversive and utopian possibilities of the arts.\"","rel":"","context":"In "Arts and Culture"","block_context":{"text":"Arts and Culture","link":"https:\/\/www.artsjournal.com\/scenechange\/category\/arts-and-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/07\/Collective-Ink-Book-Cover.jpg?fit=1080%2C1080&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/07\/Collective-Ink-Book-Cover.jpg?fit=1080%2C1080&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/07\/Collective-Ink-Book-Cover.jpg?fit=1080%2C1080&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/07\/Collective-Ink-Book-Cover.jpg?fit=1080%2C1080&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2024\/07\/Collective-Ink-Book-Cover.jpg?fit=1080%2C1080&ssl=1&resize=1050%2C600 3x"},"classes":[]}],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/posts\/493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/comments?post=493"}],"version-history":[{"count":1,"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/posts\/493\/revisions"}],"predecessor-version":[{"id":499,"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/posts\/493\/revisions\/499"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/media\/495"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/media?parent=493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/categories?post=493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/scenechange\/wp-json\/wp\/v2\/tags?post=493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}