In Part 2 of our series on starting a dance troupe, we ask (and answer) the tricky questions: What are the pros and cons of being a nonprofit, and the logistics of becoming one? 

Few people start a dance company with dollar signs in their eyes. Only the extraordinarily talented and extremely lucky few gain widespread fame or glory, and even then, financial rewards are elusive. For the vast majority, the value of a company is more ephemeral—it’s hard to put a dollar value on the importance of an artistic outlet or the pleasure of working with gifted collaborators.

Because of the economic realities of running a concert dance troupe (expenses are high, funding and revenue low), most are run as nonprofit organizations, meaning they meet the requirements of Section 501(c)(3) of the Internal Revenue Code. As a result, nonprofits are often referred to as 501(c)(3)s. (One rare for-profit company in the U.S. is Momix, the modern-dance offshoot of the wildly popular Pilobolus, itself a nonprofit.)

Although there are distinct benefits to nonprofit status, it is not the right solution for all dance companies. How do you determine if, when and how you should incorporate as a nonprofit? The complicated answer depends on a variety of factors, including your company’s revenue, established infrastructure—and future goals.

The Nonprofit Pros
The benefits of nonprofit status are straightforward. A nonprofit company is exempt from taxes, including income tax and some sales and real-estate taxes, and is eligible for special postal rates. Nonprofits can apply for grants from the local, state and federal government and foundations, the bulk of which only offer money to nonprofit organizations, and can receive donations that are tax-deductible from individuals. Reduced rates in theater rental and advertising, among other benefits, sweeten the deal.

“When you compare the amount of money it costs to rent a theater and pay for lighting, costumes and advertising to the amount of seats that a small theater has—keeping in mind that you can’t charge $50 a seat in a small theater—you realize it’s almost impossible to make money,” says Jennifer Weber of Decadance Theater, a hip-hop company in New York City that is in the midst of applying for nonprofit status.

Randy Swartz, artistic director of Dance Affiliates and president of Stagestep in Philadelphia, agrees: “Unless you have an immensely popular group instantly, you’re going to be hard pressed to match box office to expenses.” In addition, the formation of a nonprofit corporation provides protection for the company’s members and directors from personal liability, should the company face a lawsuit or insolvency.

With the break-even point for performances more and more difficult to reach, the reduction in the tax burden and increase in potential income make applying to become a nonprofit corporation seem like a no-brainer for dance companies.

The Nonprofit Cons
But the decision is anything but simple. “You have to have a certain amount of infrastructure once you’re a 501(c)(3), and you need to make sure that you can support that infrastructure,” advises Barbara Bryan, who manages a number of small dance companies, including John Jasperse Company, Tere O’Connor Dance, Wally Cardona Quartet and the choreographer Sarah Michelson. “You have to form a board of directors and hold quarterly board meetings, which becomes increasingly complicated as the board grows. You have to put employees on payroll, which involves paying for unemployment insurance as well as disability and workers compensation insurance.”

Although the definition of the employer/employee relationship doesn’t change with nonprofit status, many dance companies find that once they are official nonprofit corporations, they are “on the radar” of the Internal Revenue Service, and the increased level of scrutiny of their operations forces them to get all their financials in compliance. With a payroll system, dancers are treated as employees, rather than independent contractors. As a result, federal, state and local taxes, as well as Social Security, must be withheld from their salaries.

Another drawback to filing for 501(c)(3) status is the cost of filing and of staffing to stay in compliance. Although organizations such as Volunteer Lawyers for the Arts (or the accountant and lawyer you wisely invite to join your Board of Directors) can help with some of the initial paperwork, there is a filing fee of around $1,500 to contend with. In addition, nonprofits have to submit detailed documentation to federal, state and local authorities to prove compliance, requiring staff to prepare and file this information and to maintain payroll.

Add to this the fact that after becoming a 501(c)(3), your company’s financial information is available to the public, and the prospect can seem less enticing. As a nonprofit, of course, your company is essentially a charitable organization—one that is formed for the common good. You may struggle with the idea of pouring your heart, soul and waking hours into an institution that doesn’t really belong to you. “When you create a nonprofit organization, it’s no longer yours,” says Swartz. “You don’t own it. It’s held in the community trust. If and when that nonprofit dissolves, its assets must pass on to another nonprofit. It cannot be distributed in any way, shape or form to an individual.”

Attaining Nonprofit Status
If you do decide that nonprofit status is for you, keep in mind that becoming an official nonprofit, tax-exempt entity is a process that often parallels the growth of a dance company. (See “10 Steps to Creating a Nonprofit, Tax-Exempt Corporation” on page 157 for the steps you should take.)

Most dance troupes start off informally, with earnings and expenses reported on the artistic director’s tax return as small business or self-employment earnings. A common intermediate step is obtaining nonprofit status under the umbrella of a larger nonprofit, usually a local dance service organization. As a company becomes more established and revenues increase, official nonprofit, tax-exempt status becomes more and more important.

“There are different stages,” confirms Dana Tai Soon Burgess, artistic director of Dana Tai Soon Burgess Dance Company, a modern troupe based in Washington, DC. “The thing about becoming nonprofit is that you want to do it organically, when you’re large enough, and when you can answer questions like, ‘Why do I really need a board of directors?’” Burgess started working with dancers in 1991 and solidified the company in 1993. The troupe started the process of filing for federal tax-exempt status in 1996 but didn’t complete all the paperwork until 1997.

Alternatives to the For-Profit/Nonprofit Conundrum
For companies seeking some of the benefits of nonprofit status without actually filing for federal tax-exempt status, assuming nonprofit status through a fiscal agency can be an appealing solution. Service organizations act as umbrellas for smaller companies that share their mission. For a small fee or a percentage of the income from grants, these organizations enable the smaller companies to adopt their nonprofit status in some parts of their operations.

Decadance Theater spent a few years using The Field in New York City as a fiscal agent. “It’s something that I would definitely recommend,” says Weber. The vast majority of—but not all—foundations allow companies with nonprofit status through a fiscal agency to apply for grants.

There are limitations to this kind of nonprofit status, however. Bryan notes that once a company starts bringing in a fairly significant amount of grants (she estimates the breaking point at $60,000 per year), it doesn’t make financial sense to give a large chunk of the grant money to a third party. And individual donors can be loathe to send checks through a third party.

The nonprofit status itself has limits, which has led Decadance to move beyond fiscal agency. “You can only use it to get donations and grants,” explains Weber. “The Field will only accept the money if it’s a donation; it can’t be a payment for a service rendered, like a performance, so it gets complicated.” In addition, organizations that offer fiscal agency are generally in cities; companies in less densely populated regions of the country may not be able to find such sponsorship.

Thinking Ahead
Whether or not to pursue nonprofit status may ultimately depend upon your company’s goals. Bryan points to one choreographer she works with who has been successful, bringing in upwards of $200,000 annually, but hasn’t applied for nonprofit status because she’s not certain that she wants to continue the demanding schedule that a dance company requires in the long-term.

On the opposite side of the spectrum is Kathleen Dyer, who sought and received nonprofit status in 2001 for her small, emerging troupe, KDNY Dance. “I’m determined that I’m going to get bigger every year, I’m going to get more organized every year and I’m going to do it just by sheer perseverance,” says Dyer. Like many dancemakers with troupes of all sizes, Dyer has her own definition of wealth, valuing a life spent creating and sharing art more than monetary profit. DT

Caitlin Sims is the Editor at Large of Dance Teacher and Dance Spirit magazines.

Dance Teachers Trending
Roshe (center) teaching at Steps on Broadway in New York City. Photo by Jacob Hiss, courtesy of Roshe

Although Debbie Roshe's class doesn't demand perfect technique or mastering complicated tricks, her intricate musicality is what really challenges students. "Holding weird counts to obscure music is harder," she says of her Fosse-influenced jazz style, "but it's more interesting."

Keep reading... Show less
Sponsored by Dean College
Amanda Donahue, ATC, working with a student in her clinic in the Palladino School of Dance at Dean College. Courtesy Dean College

The Joan Phelps Palladino School of Dance at Dean College is one of just 10 college programs in the U.S. with a full-time athletic trainer devoted solely to its dancers. But what makes the school even more unique is that certified athletic trainer Amanda Donahue isn't just available to the students for appointments and backstage coverage—she's in the studio with them and collaborating with dance faculty to prevent injuries and build stronger dancers.

"Gone are the days when people would say, 'Don't go to the gym, you'll bulk up,'" says Kristina Berger, who teaches Horton and Hawkins technique as an assistant professor of dance. "We understand now that cross-training is actually vital, and how we've embraced that at Dean is extremely rare. For one thing, we're not sharing an athletic trainer with the football players, who require a totally different skillset." For another, she says, the faculty and Donahue are focused on giving students tools to prolong their careers.

After six years of this approach, here are the benefits they've seen:

Keep reading... Show less
Studio Owners
Getty Images

Enrollment is an issue that plagues brand-new and veteran studio owners alike. Without a steady stream of revenue from new students coming through your doors, your studio won't survive—no matter how crisp your dancers' technique is or how well-produced your recitals are.

Enrollment—in biz speak, customer acquisition and retention—depends on your business' investment in marketing. How effectively you get the word out about your studio will directly influence the number of people who register. Successful businesses typically use certain tried-and-true marketing strategies to recruit and retain clients or customers. These four studio owners' tricks for kicking enrollment into high gear are modeled after classic marketing techniques.

Keep reading... Show less
Sponsored by Alternative Balance
Courtesy Alternative Balance

As a dance teacher, you know more than anyone that things can go wrong—students blank on choreography onstage, costumes don't fit and dancers quit the competition team unexpectedly. Why not apply that same mindset to your status as an independent contractor at a studio or as a studio owner?

Insurance is there to give you peace of mind, even when the unexpected happens. (Especially since attorney fees can be expensive, even when you've done nothing wrong as a teacher.) Taking a preemptive approach to your career—insuring yourself—can save you money, time and stress in the long run.

We talked to expert Miriam Ball of Alternative Balance Professional Group about five scenarios in which having insurance would be key.

Keep reading... Show less
Dance Teacher Tips

Dance teachers are just as apt to fall into the trap of perfectionism and self-criticism as the students they teach. The high-pressure environment that is the dance world today makes it difficult to endure while keeping a healthy perspective on who we truly are.

To help you quiet your inner critic, and by extension set an example of self-love for your students, we caught up with sports psychologist Caroline Silby. Here she shares strategies for managing what she calls "neurotic perfectionism." "Self-attacking puts teachers and athletes in a constant state of stress, often making them rigid, inflexible and ultimately fueling high anxiety rather than high levels of performance," Silby says. "Perfectionistic teachers, dancers and athletes can learn to set emotional boundaries. They can use doubt, frustration and worry about missing expectations as cues to take actions that align with what they do when teaching/performing well and feeling in-control. Being relentless about applying a solution-oriented approach can help the perfectionist move through intense emotional states more efficiently."

Check out those strategies below!

Keep reading... Show less
Dance Teacher Tips

Since the dawn of time, performers have had to deal with annoying, constant blisters. As every dance teacher knows (and every student is sure to find out), blisters are a fact of life, and we all need to figure out a plan of action for how to deal with them.

Instead of bleeding through pointe shoes and begging you to let them sit out, your students should know these tricks for how to prevent/deal with their skin when it starts to sting.

You're welcome!

Keep reading... Show less
Sponsored by Turn It Up Dance Challenge
Courtesy Turn It Up

With back-to-back classes, early-morning stage calls and remembering to pack countless costume accessories, competition and convention weekends can feel like a whirlwind for even the most seasoned of studios. Take the advice of Turn It Up Dance Challenge master teachers Alex Wong and Maud Arnold and president Melissa Burns on how to make the experience feel meaningful and successful for your dancers:

Keep reading... Show less
Dance Teachers Trending
Photo by Brian Guilliaux, courtesy of Coudron

Eric Coudron understands firsthand the hurdles competition dancers face when falling in love with ballet. Now the director of ballet at Prodigy Dance and Performing Arts Centre in Frisco, Texas, Coudron trained as a competition dancer when he was growing up. "It's such a structured form of dance that when they come back to it after all of the other styles they are training in, they don't feel at home at the barre," he says.

Keep reading... Show less
Sponsored by The Studio Director

As a studio owner, you're probably pretty used to juggling. Running a business is demanding, with new questions and challenges pulling your attention in a million different directions each day.

But there's a solution that could be saving you time and money (and sanity!). Studio management systems are easy-to-use software programs designed for the particular needs of studio owners, offering tools like billing, enrollment, inventory and emails, all in one place. The right studio management system can help you handle the day-to-day tasks that bog you down as a business owner, leaving you more time for the most important work—like connecting with students and planning creative curriculums for them. Plus, these systems can keep you from spending extra money on hiring multiple specialists or using multiple platforms to meet your administrative needs.

So how do you make sure you're choosing a studio management system that offers the same quality that your studio does? We talked to The Studio Director—whose studio management system provides a whole host of streamlined features—about the must-haves for any system, and the bonuses that make an excellent product stand out:

Keep reading... Show less
Dance Teachers Trending
Kendra Portier. Photo by Scott Shaw, courtesy of Gibney Dance

As an artist in residence at the University of Maryland in College Park, Kendra Portier is in a unique position. After almost a decade of performing with David Dorfman Dance and three years earning her MFA from the University of Illinois at Urbana-Champaign, she's using her two-year gig at UMD (through spring 2020) to "see how teaching in academia really feels," she says. It's also given her the rare opportunity to feel grounded. "I'm going to be here for two years," she says, which offers her the chance to figure out the answers to some hard questions. "What does it mean to not dance for somebody else?" she asks. "What does it mean to take my work more seriously? To realize I really like making work, and figuring out how that can happen in an academic place."

Keep reading... Show less
Dancer Health
Deanna Paolantonio leads a workshop. Photo courtesy of Paolantonio

Deanna Paolantonio had been interested in body positivity long before diabetes ever crossed her mind. As a Zumba and Pilates instructor who had just earned her master's degree in dance studies, she focused her research on the relationship between fitness and body image for women and young girls. Then, at age 25, just as she was accepted into the PhD program at York University in Toronto, she was diagnosed with type 1 diabetes (T1D).

Keep reading... Show less


Get DanceTeacher in your inbox