Tax Exemptions for Community Theaters

Video Transcript

"On behalf of expertvillage.com, my name is Stan and I'm here to tell you about theater resources for community theater. I want to tell you about getting 501 C3 tax-exempt status and why that's important and how you go about doing that. When you form and organization it's a good idea to incorporate your theater organizations so you're protected from liability issues and that sort of thing. When you incorporate, you have bylaws and articles of incorporation and sorts of documents that you need to generate the rules by which you're going to operate, by which your board operates. Once you have all these documents in place, you have a board in place and you're a well managed organization, then you can apply to IRS for a 501 C3 tax exempt status. Why that's so important is that unless you've got that it's very, very difficult to raise money. When you've got that 501 C3, then when people donate money to you or when corporations to you they can deduct that donation from their income taxes like when you give money to the Red Cross. It's the same kind of thing. You can generate a lot more in the way of donations when you've got that 501 C3. You have to fill out some forms; you've got to send them into the IRS. When we did ours we sent them in and we thought it would take half a year to get our letter back and it took less than 30 days. Theater organizations are readily granted these 501 C3 tax-exempt status letters. It was just amazing the change it made in our organization. That's one of the reasons we've grown so much in the last couple of years. All of a sudden, we started getting sponsors for our shows. Major corporations would pay substantial amounts of money to underwrite all the expenses or putting a show on the stage. We started getting other donations from private individuals. They can deduct that from their income tax. When somebody would donate a prop to us or a piece of furniture, that's a deduction they can take from their income tax. Even when our volunteers drive to come to rehearsals and come to performances, they can deduct that mileage from their income tax because we're 501 C3 organization. So it makes a huge difference to everybody involved in the organization. "