Info You Can Use: It Is Possible To Be Too Thankful To Volunteers

As your performance season ends, like me you may be looking to thank all the volunteers whose hard work made your projects possible over the past year. You might feel a little guilty about all the effort they put forth on your behalf and want to spend a little more money than you planned in showing your appreciation.

However, according to a post by the For Purpose Law Group, there is such a thing as being too appreciative and you can create more problems for your volunteers than you intended.

For example, technically giving a volunteer a $25 gift card is taxable and you as the organization are supposed to withhold taxes.

Stipends or cash gifts of any amount (even allowable “nominal” stipends to bona fide volunteers) are generally taxable income. The volunteer recipient must report the amounts on his or her tax return and pay applicable taxes AND the organization must withhold taxes and make FICA payments – just as it does for employees.

Yeah, I did not know that either.

The other wrinkle is if you pay volunteer a stipend. A volunteer can’t be paid a stipend in return for their services, but you can use it to help offset expenses they might incur. This is something community theater groups often do with their cast and crew. Even in this case, there are some strict guidelines which apply.

Pay particular attention to the last paragraph.

“Although a volunteer can receive no compensation, a volunteer can be paid expenses, reasonable benefits or a nominal fee (or any combination) to perform … services.”

“…(A) fee is not nominal if it is a substitute for compensation or tied to productivity.” And “… determining whether the expenses, benefits or fees would preclude an individual from qualifying as a volunteer under the FLSA requires examining the total amount of payments in the context of the economic realities of a particular situation.”

The agency “presumes that fees paid to volunteers are nominal as long as the fee does not exceed twenty percent of what an employer would otherwise pay to hire a full-time employee for the same services.”

But – and this is a big “but” – if the “volunteer” receives anything of value exceeding $500 a year, that person must be treated as paid staff or as an independent contractor and relinquishes important liability protection under the federal Volunteer Protection Act (as well as becoming potentially liable, in the case of independent contractor classification, for a whole slew of self-employment taxes).

I point out that last paragraph because it is easy to hit that $500 threshold. Paying someone $100 for six weeks of rehearsal and a performance as gesture of acknowledgment and to help defray gas doesn’t come close to really paying them what they are worth. But it is so very easy for a really dedicated person to hit $500 over the course of a year. (And remember, there is supposed to be a reporting of income and withholding on each of those $100 payments.)

It appears that the prohibition against tying the stipend to productivity means you can’t provide a larger stipend to crew heads than to the crew or give everyone who did 250 volunteer hours a $25 gift certificate and everyone who did fewer hours a $15 gift certificate.

“A test to help evaluate whether a payment to a volunteer is a compensation substitute is “whether the amount of the fee varies as the particular individual spends more or less time engaged in the volunteer activities.”

In their suggestions at the end of the post, authors May Harris and Linda Rosenthal, say the best solution may be a bouquet of flowers rather than a gift card. I think other modest gestures like appreciation meals probably qualify as well, assuming you aren’t serving caviar.

Info You Can Use: Do You Know The Value of A Volunteer’s Time?

Did you know I am a contributor to ArtsHacker, a website dedicated to offering all sorts of solutions to arts organizations?

Did you know that a volunteer’s time is worth an average of $22.55/hour and may be worth more in your locale?

Did you know you can actually claim each volunteer’s time on grant reports and financial reporting that you submit?

Did you know I wrote all about these things in a post that appeared on ArtsHacker last Wednesday?

Did you know that a meme about volunteering featuring the World’s Most Interesting Man makes your post more interesting?

Well, hey, now you do.

All kidding aside, volunteer hours are very valuable to an arts organization both as a result of the effort they expend on its behalf and for the value you can claim on various financial documents. And with even just a few volunteers working for you, it can add up to quite a lot.

There are accounting rules, of course, that limit what and how much of a volunteer’s time you can claim. But even if you use this information for nothing more than helping your organization recognize the true value of a volunteer’s effort, calculating this number can be worth it.

Do you know the value of your volunteers’ time?

Would You Trade Board Oversight For Investor Scrutiny?

The Clyde Fitch Report takes a close look at a bill being proposed in the U.S. Senate to give Broadway investors the same tax break as those who invest in movies.

The goal of the legislation according to a press release put out by the bill’s sponsor, New York Sen. Chuck Schumer is to provide more incentive for banks and investment funds to invest in Broadway shows and therefore spur job growth.

“..Due to the tremendous risk involved, it is very unlikely that any managed fund or banking institution in the United States will lend resources for live theatrical productions, so the majority of capitalization comes from small or independent investors.”

After some analysis The Clyde Fitch Reports’ asks if there really is a dearth of investors and they wonder if banks should really be investing clients’ money in an endeavor widely acknowledged as likely to lose money.

Do you believe banking and investment institutions should gamble their clients’ money to produce Broadway shows?

Do you believe 233 names, sets of names and/or entities listed over the title of a random list of 10 Broadway shows represents a problem generating a “pool of interested investors in Broadway”?

Do you believe investors in commercial Broadway deserve a tax break?

Are there any other individuals in the American theater for whom tax-code tweaks might be desirable?

When I first read the article, I thought it was a proposal to get investors paid earlier in the process. While it isn’t, I wondered with the weight of large investment institutions present, would the arrangement get altered so that investors recouped sooner and “Hollywood accounting” adopted resulting in the creatives getting little.

I also wondered with more money behind them, would Broadway productions become more adventuresome, or even more oriented toward stage adaptations of proven works and revivals.

On the other hand, since I am always keeping my eyes open for alternative funding models, I also wondered if this might provide more options nationally to arts organizations.

When I first read the following from the Schumer press release, I thought perhaps these investment tax breaks might be applicable to artistic projects created around the country.

“On average, Touring Broadway contributed an economic impact to the local economy that was 3.5 times the gross ticket sales. This income is also vital to sustaining our nation’s theatres, as more than 50% of Performing Arts Center’s ticket sales derive from patrons attending the Touring Broadway series. This revenue permits local venues to offer opera, ballet, unique exhibitions and to fund much needed arts education curricula. Without Touring Broadway, all of these vital programs would suffer.”

Then I realized, no, what the release is saying is that Broadway needs the tax breaks so everyone else can present Broadway tours.

I am a little skeptical about the economics cited here. I don’t know about the venues with week long runs, but while Broadway audiences are among our biggest, they are also the shows that tend to lose the most money for us. We ain’t funding anything else off the proceeds.

Now if they were obliged to lower their rates for non-profits in return for this tax break, that would be beneficial to us. But I don’t see that happening.

All the same, I do wonder if the law being proposed could benefit people in other parts of the country looking to run a performing arts center as a commercial enterprise by allowing them to solicit investors.

Or perhaps it could help turn other cities into development centers by attracting investment for works that weren’t necessarily contemplated to go to Broadway but rather stay put in Portland, Minneapolis, Miami, etc. as a significant attraction for the region.

The productions may not gain the same cachet it would from Broadway, but what it did develop might be enough to create regional or national interest in a tour of say a multi-media dance work that generated a respectable return on the investment.

If the legislation is not written in such a way to include non-Broadway productions, is it worth lobbying to have the scope widened?

As the title of this post suggests, it would change the complexion of the way performing arts entities operated.

Does Your Venue Policy Include Terrorism Insurance? Knowing Might Become Important Soon

We get a lot of alerts about Congressional actions that might impact arts organizations all the time. Something that wasn’t really on my radar at all was the (non) renewal of the Terrorism Risk Insurance Act. Basically, the federal government provides guarantees for insurance companies that end up having to pay out terrorism claims. If the act isn’t renewed by January 31, it is likely that terrorism coverage policies will be cancelled.

What is making this a big deal is the claim that the Super Bowl won’t happen if this isn’t renewed. This has been an issue before in 2006 with the World Cup when there was difficulty obtaining coverage that was not prohibitively expensive. (By the way, NBC says the game will go on regardless.)

I am not sure if this would impact performing arts centers or not, but I suspect larger stadium shows and outdoor summer festivals like those held in NYC Central Park and Chicago’s Grant park might be at risk.

According to an article on The Hill website, as of 11:00 am this morning, there was still some disagreement between the House and Senate on the details of the renewal.

This is one of those issues that can end up impacting you without you even being aware that it is looming. How many people know if they have terrorism insurance included in their commercial policy? When was the last time you read the updates to your policy?

I will confess, I don’t often read updates to my auto policy but recently did and discovered changes that are clearly aimed at keeping me from using my vehicle for ride sharing programs like Uber or Lyft.

Like it or not, the possibility of terrorism is calculated into so much of what we do. It’s issues like the renewal of this bill that comprise the thousand little things we aren’t aware may have a big impact on our operations.

I wonder, was there ever insurance against nuclear attack during the height of the Cold War? I have recently been listening to ’80s music and realized there are a surprising number of references to nuclear war. I thought I was just anxious because I was a teenager. I guess the absence of an actual strike prevented anyone from realizing what the potential payout might have been.