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Thread: Moving from Non-Profit to a Business

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  1. Default Moving from Non-Profit to a Business 
    #1
    Join Date
    Apr 2011
    Location
    Fall River, Nova Scotia
    Posts
    235
    I personally sponsored a non-profit Haunt for 4 years and raised thousands for the kids, but paid thousands to buy props and costumes.
    I told the non profit organization I have to change everything this year. Previous 4 years they kept 100% of all money made.
    I am a huge supporter of the Non-profit so a few years investing was fine, but now, I need to be paid.
    Do you recommend Incorporating and buying Special Event Insurance if I only invoice my services to the Non Profit?
    Can I pick one or the other? ( We don't have LLC in Canada)
    I would own and run the Haunt, but I worry the non-profit Assoc. wouldn't give me 50+ volunteers if they go from 100% profit down to 30% of the ticket sales.
    I don't think an Accountant or Lawyer could give me better advice than this Forum.
     

  2. Default  
    #2
    Join Date
    Nov 2011
    Posts
    540
    I know JACK about all this, but here's a free bump. Perhaps do a search for similar questions... i know it's hard to do with your sorta unique situation.

    However, the search was just an idea to pass some time till like.. let's say Greg or Allen or someone to chime in. Brother Mysterio should have some ideas too.


    Good luck.

    Dewayne
     

  3. Default  
    #3
    Join Date
    Aug 2003
    Location
    Tyler, Texas, United States
    Posts
    2,614
    It is one extreme of the other. Either you have a pro haunt and the charity gets 10 to 20 % regardless of participation or you operate at a service to the charity and charge 20% to 30% of the ticket income for maintenance, storage and upgrade of the haunt. It is either a charity and all investment was donated already or it is a pro haunt that gives 10% to 30% of proceeds. Usually overnight converting like you describe, unless it is a small venue is kind of you just closed the thing down with a radical change.

    You would not have to form any special entity or be the one that provides the insurance it the charity is getting 70% and it was still for the charity. There are limitations of percentage in the charity doctrine purchases most likely.

    If the charity volunteers are to work at your pro haunt in exchange for a donation you can incentivize it to if they provide so many man hours volunteered they get this percentage and that percentage. Kind of like point earnings. You can also have several charities in there at the same time sort of competing for percentages of donations by demonstrated support.

    A real pro haunt means forget charity totally. If any former volunteers would like to participate they can.

    The difference between the two is someone running a haunt for charity is concerned more with people only volunteering at a comfortable pace and not having to work to hard to provide some entertainment for the community and recieve donations. A pro haunt is actors that are serious about acting, building the business and future opportunity for the event and themselves and aren't going to just drop it when they take off the mask.

    Attendance responce is also greatly different. Charity may see only 10% to 25% of what a pro haunt will attract.

    Charity haunts tend to spend little or nothing on advertsing and expect everyone to do something for them. Pro haunts kick ass and take names and make profits. And so the difference in percentage lends some intresting numbers for charity participation.

    Say your charity was used to seeing 2500 per year and kept 100%
    Now they will see 10,000 people and get 20% if they are nice and that is almost the same income for the charity.
    The only difference was who was in control of aggressively advertising and having actors that were equaly there to work not have just show up participation.

    There is a difference in who the customers are relative to how it is presented. Customers actually pick I would rather take my family to a lame less impact one and young adults might feel a pro haunt is more the level of thrill seeking they are after. Two totally different clientels.

    So, there are ways to handle a transition from charity to pro. Income wise it is possibly the charity makes the same amount per year, and it has a cap. You will donate what they made previous years for their proper support. But the attendance is going to change due to advertsing as a pro haunt and anything above that amount is income to the pro haunt and pro staff, actors and yearly upgrades to the structures and details.

    The other ways don't really make freinds for life and they are the charity can buy the haunt you have for a value and you go on and build another that is the pro haunt. They run theirs themselves and are only responcible for paying this dollar figure over a few years. Or you just up and sorry it is now a pro haunt with a different name and all proceeds have to go into securing and maintaining facilities. If anyone individual would like to come to pro world you are welcome. Perhaps it pays something rather than you have to give to partipate.

    Sorry, things change. Incomes and expendable incomes over the years have changed, whether people are able to give versus have to meet responcibilities change with age and family. Charities and how much they care about anything at all changes too if left to it's own devices. The charity environment is very unstable over a period of years as well as limits you to having 75% more money to do something with. Even if you modify my percentages it is a lot of money. You change raising $10,000 a year or $25,000 a year and using up $25,000 in resources that is more like a ball in cup game of first the money was here and now we say it is all a donation. To $40,000 to $200,000 that is the new cash flow for a pro haunt over the first several years.

    Being a corporation or taking advice of an accountant that has never owned and operated a business is irrelivant to the over all operation. At pro level it can be all a sole proprietor ship and maybe just have a buisness registration or license and it has your name on it. Like in the old days there was John Smith Foods. If you wanted something you saw John, if it was time to pay, you handed it to John. If something went wrong, John takes care of it. If John was a pro he likely has made enough income to actually be responcible for things. A charity mentality is Oh, Lordy, we are just a poor charity, what ever shall we do. It is SO much easier to have money and not have a bunch of people that have some kind of group think about anything.

    You may want to go a slower transition from first it was all for the charity to now it has an overhead of 20 to 30% and then now there is going to be advertising that takes it to a 50 50 split to sorry there is now so many customers that it has to go pro and get proper insurance credability and even the location will need to be larger. As opposed to I used to have money and now you can all suck it. As the attendance increases the dollar figure the charity gets is the same only they are no longer the ones running the ticket booth and counting the number of tickets sold.

    Quite a few options and whether it is worth completely dropping the charity to fend for themselves is relative to how many customers you actually see presently. Is it serious attendance or a joke relative to what a pro haunt with advertising might bring in working capital. Being a philanthropist sounds cool but in reality those are people that are billionaires. They aren't giving a majority of their time and money to the community with no overall benefit to either.

    Any event is going to require about $25,000 in dollar value for facilities, electric bills, expendable costumes, number of times the toilets get pumped out, value of the building it is in for so many weeks or months. Actual cost of the things. So if a charity isn't bringing in $25,000 or more for what ever reason, it is a loser charity. In effecient total endevor that is actually stealing money from all types of places and claiming it to be for some other goal. You can have venues, building materials, all labor, everything donated and borrowed but it all really cost someone somewhere money or had wear and tear on some resource that would eventually be used up and gone.

    Without numbers I can't determine at what level to promise or pull support. I can see getting much bigger and capping the yearly donation but over time I would expect their involvement to be actually a drag on what needs to be done and at what level of performance a pro haunt really needs to be.

    It is definitely a hard decision. The absolute best way is two seperate affairs, you still support the charity to the level they have been accustomed and appoint people to run it while you go pro accross town with an entirely different attitude and see the difference in results first hand. They both send customers to the other but in reality the customers are entirely different. The volume of business demands they are seperated usually. Don't rely on all kinds of customers will come to a haunt that fits all kinds of customers.

    There is a majority of customers that don't want to hear charity, or theater group or anything happy or donatable because it sounds like it has sacrificed some entertainment value to be for kids that have never gone to a haunted house. A pro haunt just sounds like nothing has been withheld and might be worth getting off the couch for. Keeping the same name and style of a charity event limits how serious the customers are to respond. Like the stories in town of how the kids liked it 10 years ago never get replaced with now it has cool masks and real set design and so on.

    For your own though process, you make a list of what sucks and what doesn't and sometime you stick with the charity and just replace your burden with other sponsors. Sometimes you just pull the rug out from under them and be a dick. At no time should it be killing you personally physically or financially. At least in a better world.
    Last edited by Greg Chrise; 08-03-2012 at 10:47 PM.


    Another fabulous post from the U.S.Department of Wild Imaginings, now in spectaclar stereo, sponsored by the Adhesives and Sealants Council, suggesting ways to stick things together since the 1800s. Not fabulous in a gay way. Your results may vary. Illinois residents add 8% sales tax. These posts have been made by professional post makers, do not try this type of posting on your own without extensive training, lovely assistants and a trusty clown horn.
     

  4. Default  
    #4
    Join Date
    Apr 2011
    Location
    Fall River, Nova Scotia
    Posts
    235
    Holy Crow!! Thank you!
    Great information.
     

  5. Default  
    #5
    Join Date
    Mar 2012
    Posts
    159
    Best way to support a charity is to create a sustainable business that gives a portion of it's profit to the charity. The biggest contributors to charity that I know personally run their own business to support their philanthropy. Your charity should support you 100%. Not sure I just said anything that matters or helps... just a thought.
     

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