Posted 17 December 2012 - 02:06 PM
Background: prior to becoming RDA members, the ballet company expenses were limited to costumes and choreography which were minimal and paid directly by the company members (or, rather, their parents). Since joining RDA, obviously, expenses skyrocketed, so the ballet company director decided to establish a Guild to help defray expenses. The Guild is basically made up of the ballet company families who pay annual ballet company dues which go to the Guild bank account. The Guild is operating under the non profit umbrella of the Foundation which produces the annual Nutcracker and Spring productions. The problem that is developing is that the Guild has been hugely successful in our fundraising efforts. We don't yet raise enough to cover ALL RDA expenses, but we now cover costumes, choreography, kits and AD expenses to attend meetings etc. Because of our success, the Foundation has begun looking at using our funds to cover other Foundation costs associated with productions. When the Board argued that we should do this since the Foundation "puts on productions which benefit the ballet company" our (the Guild's) response was that productions are open to all members of the community, that you don't have to be in the Company to be in the productions and that company members pay the same production fees as non company members, so the productions benefit the community at large, and not just the company members.
NOW, the studio owner (who is struggling financially) is asking that we start kicking in a percentage of our fundraising to covers studio costs like rent, electricity etc, since ballet company members spend additional studio time in rehearsals.
So my question is: Is this common practice? Do companies pay the studio extra for rehearsal time? I think asking a non-profit to cover the expenses of a for-profit studio is crossing the line of what's appropriate. The Guild members are getting discouraged that not only do we have to fight the Foundation over funds we've raised, but now the studio owner, who was the one who got us into RDA to begin with.
What is the normal experience for RDA companies as to how they raise money and how it is spent?
Posted 17 December 2012 - 02:15 PM
Posted 17 December 2012 - 02:53 PM
In our RDA company, the company (board) pays for the dancer's participation kit each year if funds are available. We do not allow fundraising specifically for dancer festival expenses; all fundraising is for the general fund of the organization. Our dancers' parents understand that they are responsible for all other expenses (travel, hotel, food and kits if necessary). Our guild is also set up so that again all funds raised go directly to the general fund and appropriation of the funds is decided by the board/staff for the best interest of the company as a whole not individuals.
Posted 17 December 2012 - 02:58 PM
The question becomes who owns the Foundation and how it is related to the studio if at all. But even with that, what you're describing is pretty common. The difference is when the studio owns the company and puts on all the performances.
We did different fundraisers to help offset the company budget which included Nutcracker and any overage was put toward RDA kits. This meant each year, the amount we had taken off our kits was different.
Posted 17 December 2012 - 03:29 PM
Posted 19 December 2012 - 11:58 AM
The AD of the ballet company is also the studio owner. Originally the studio "owned" the ballet company, but in order to belong to RDA (so I'm told) the ballet company had to be affiliated with a non-profit, so the AD/studio owner asked the Foundation (yes, a 501©(3)) to become the new "owner" of the ballet company for RDA purposes. It was at that point that the AD/studio owner asked the company parents to establish the Guild for the express purpose of supporting the ballet company, partly because she was starting to lose Company members due to spiraling costs. The Guild, while not a separate non-profit (yet), does have its own By-Laws and Mission Statement. The separation of the Foundation from the studio owner/AD is fairly thin, as the original founding Board members were the studio owners parents, and studio employees currently sit on the Board. As the ballet company AD, the studio owner is in a position where she could theoretically demand that the company rehearse 5 days a week, and then ask us to pay for those rehearsals. She is in effect, already doing that, just not 5 days a week yet.
As an accountant, I am fairly familiar with the rules and regulations of not-for-profits, filing both annual 990's for clients, and also the 1023 Form requesting exemption. I've advised the Guild that our fundraising cannot go strictly to company members, otherwise we are just raising money to benefit ourselves. We do designate a certain percentage of our fundraising to go back to the Foundation as administrative costs, and plan to offer "scholarships" to non-company students in need, as our funds allow.
I was mainly just trying to get a feel for what is the "norm" among other RDA companies as to how they manage fundraising (if they do), how much is paid or covered by the studio owner and/or AD and how much is paid by the company members/parents? From inception, until the Guild was established, the parents paid everything related to RDA including the annual membership fee and the AD's expenses. This is why the parents started fussing (not me BTW) about costs, since the AD was the one who wanted to belong to RDA, not the parents, they felt that the AD should be footing more of the bill.
Posted 19 December 2012 - 03:17 PM
With that stated, the guild should be working with the AD to determine the parameters of rehearsal time of the company that is managed by the Foundation. The Foundation/Guild should be able to determine when company rehearsals are. In the case of two local companies that is Wednesday and Saturday for sure with Sunday as an option. And should after that determination pay for the rental of the facility if that is so determined as the only way the company can rehearse. In reality, this separation means that the company is it's separate entity with a "hired" AD.
In terms of using all fundraising for the parents, for RDA that would not be the case. The Foundation would not be raising money for the families, it would be raising funds to fund the company trip to RDA. What the Foundation is not able to raise then the company families as a budgetary determination would have to pay.
Posted 20 December 2012 - 12:02 AM
The point of the story is you must have safeguards in place. Especially when there are family members and studio employees on the board. I feel too many organizations take advantage of the non-profit status.
Posted 20 December 2012 - 08:21 AM
Posted 20 December 2012 - 03:46 PM
My next assignment is to get a better understanding of what a normal, functional relationship between a Guild and the parent Not For Profit should look like, and what the responsibilties and rights of each party are.
Posted 04 January 2013 - 10:30 PM
It doesn't seem too outrageous for the company to pay some kind of facility fee to the studio for rehearsal time, especially if the company has sufficient funds to do so. From a business point of view (the for-profit studio's), they are spending money to pay for something (electricity, utilities, etc) that does not inherently generate revenue for themselves. Sure, maybe the company's existence and affiliation with the studio will attract more students, but it's not the same as if they were holding classes and charging tuition.
In the situation I mentioned above, I don't believe the company paid the studio for anything like that. I could see there being a problem if the company was paying for other studio expenses - like teacher or pianist wages - that were not related to the company. And the company shouldn't be paying the full electric or gas bill or anything like that. But if there was a set fee similar to what outside dance groups would have to pay to rent out the space, that would seem okay to me (I'm not an accountant, but common-sense speaking, that sounds reasonable).
And just a quick note about fundraising/company costs - parents paid dues (about $400 per year) and were responsible for X number of tickets (say 10 or 15) per performance series. Festival costs (airfare, hotel, kits) were also covered by the parents themselves. In some cases, the company might help defray some costs in need-based cases (e.g., the dancer was over 18 or didn't have parental support, etc). Fundraising was for the company as a whole - to use on productions, choreographers, costumes, directors' festival costs, etc. There were a few costume drives, to raise money for a new production's costumes, but I am not sure how that was handled on the accounting level (were the funds truly kept separately or was it just lumped together with the rest).
Posted 05 January 2013 - 11:39 AM
The Guild raises money for the company as a whole, and the board decides what the money goes to (i.e. we can't do a fundraiser for a specific purpose such as Festival travel cost etc).
The studio donates all rehearsal space to the company (and non company dancers when it comes to the Nutcracker).
We don't pay a fee to be part of the company, and on certain levels the costs associated with Festival are largely covered but up until that point it is the parents responsibility (extra travel costs etc). From what I understand, depending on the costs any particular year, the portions of what is covered for the dancer varies (some years it may be largely "free" LOL for the parents, if it's held closer and costs are lower). On lower levels in the company, costs are not covered and solely the responsibility of the parent.
Posted 09 January 2013 - 10:17 AM