Can Religion Driven Bands File as a Tax Exempt Non-Profit?

The recent announcement of the Stryper Fan Weekend (which includes worship service with their frontman, Michael Sweet) has got my music business brain working overdrive. I can’t help but wonder if bands fueled by a religious (or even charitable) purpose could file as tax exempt non-profit organizations. Of course, there would have to be specific structural guidelines that may deviate from that of your typical band. Yet, with the proper structural guidelines there wouldn’t be much of a difference between them and your typical 501(c)(3) tax exempt non-profit organization. I’m not a lawyer, but it sure appears this way on the surface.

So, let’s break it down. According to Wikipedia, the types of organizations that could qualify as a 501(c)(3) is any Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations. The first three are key here – Religious, Educational, & Charitable. One does not need a church in order qualify, there are so many non-profits out there that don’t have churches but are still fueled by a religious purpose and/or engage in charitable efforts. The Ronnie James Dio Stand Up and Shout Cancer Fund is a perfect example of this. The main thing is that non-profits can not allocate funds for anything other than paying employee salaries and contributing to their respective causes. Also, these organizations may not campaign for a particular political group or cause; nor may they attempt to influence legislation.

Given that logic, if a band or artist engages in activities that fall under those three above mentioned causes and stays within the guidelines; I think they could qualify. Granted, they have to be legit and not just trying to cash in on a craze. Let’s create a fake band called Bromaldehyde. Their causes and charitable efforts consist of being “Big Brothers” to children who don’t have fathers in their lives in addition to hosting “worship services” and raising money to help fight world hunger. Instead of charging talent buyers to perform, the performance is given “for free” in exchange for a contribution to their cause. Also, think about who supports your favorite bands already…the fans do; now more so than ever with crowdfunding campaigns. So, the band pays themselves and their employees a salary and then uses the rest on their causes and charitable efforts. And….don’t pay any taxes.

According to the website HowStuffWorks, you just need to take the following steps when setting up a non-profit:

• Write a mission statement for your chosen organization.
• Find a group of trusted individuals to form a board of directors.
• File an article of incorporation with your state. You can find this document on your state’s government Web site. There may be a small fee when you send in the form.
• Write a list of bylaws for the organization.
• Write to the IRS to request nonprofit status. Once you’ve been approved, you’ll need to apply for the same status through your own state. You may have to fill out other forms or register with other state-run offices depending on where you live.
• Formally register your nonprofit organization with your state and apply for sales tax exemption.
• Contact your city government to find out if you need a solicitation license.
• If you’re going to be sending out a lot of mail, you can apply for a nonprofit bulk mail permit from your local post office.
• Get insurance. There are many kinds of insurance for nonprofits, so do your research and shop around before you settle with one company.

 

Granted this is all a theory and I don’t know of any band that has done this. It does seem like more than your average band is willing to do these days, but if it means not paying taxes it might be worth it. A lawyer should be able to say for sure if this can be done with respect to being an entertainer. I may just try to get a lawyer’s response to this. If you have a law degree and would like to issue a legitimate response to this, please contact us via our official website at koshermetal.com.