Thinking about Fiscal Sponsorship and its many forms
The Western Mountain Bluebird is one of the slipcase designs in the Andersen Design assets. , photo by Mackenzie Andersen
I just changed the name of the conceptual museum, yet again. The concept was born when I applied to Fractured Atlas, a fiscal sponsor in the arts, but FA declined Andersen Design’s application as a social enterprise, operating as Andersen Design had always operated since 1952, as a designer-craftsmen. free enterprise, which I am continually learning is a very political form to take in contemporary times.
It is a requirement of a fiscally sponsored project, that the project be aligned with the sponsor’s mission. The human with whom I was in direct contact at Fractured Atlas was fully confident that Andersen Design would be accepted for fiscal sponsorship because of our decades of teaching ceramic skills (STEAM skills) on the job.
That’s the basic premise of fiscal sponsorship but the more I read, the more varieties of fiscal sponsorship manifest. The organization’s webpage usually speaks very authoritatively as if their version of fiscal sponsorship is the definitive version, but I have seen many different interpretations of fiscal sponsorship over the years, so I don’t believe there is one definitive version. The basic principle is that the project aligns with the purpose of 501 (3) C, but after that, there are a variety of legal arrangements. Those arrangements are the social contract.
I came across definitions of fiscal sponsorship models on The Poise Foundation website that are like none I have ever seen before. Poise stands for “Developing Optimistic Poised Educated Girlz Foundation Inc.” The ‘Inc” part has no revenue, all the revenue goes to the foundation. In the Poise Foundation fiscal sponsorship models, ownership and control are assigned to the foundation in a way that defies a conventional belief about a foundation as a charitable organization. I’ll let my reader decide what form of social contract it is.
I am conceptualizing an alternative model that disperses ownership among independent but potentially collaborative studios. By dispersing ownership control becomes an organic interactive process, depending of course on the character of the participants.
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There was no direct interaction with the board of Fractured Atlas when it declined our application, for all I know about the board it could be an AI application, citing only that I had used the word “production”, which the board deemed to mean “being in it only for the money” and then said we could apply for different functions, one being a museum, the other a school.
That was my first experience of what it means to be subservient to a board. The museum was the best option of the choices given to us by these Wizards of Oz, hiding in their ivory tower. Stipulations attached to the school option required the willful destruction of the Andersen Design brand, not said outright but prohibiting us from teaching how to produce our line, while encouraging us to teach how to make our proprietary glazes, decorating colors, and ceramic bodies. They took their best shot but I opted for second best, the museum.
An Educational Organization
In the context of the Boothbay Peninsula conversation about our educational system, it is relevant that the Wizards of OZ recognized Andersen Design as an educational organization, a gem for teaching STEAM skills, and an alternative to the centrally controlled state educational system.
The state wants to use our public educational system “to ensure education, training and recruitment programs are in place for the primary purpose of ensuring the availability of a highly skilled workforce to support the State’s new space economy.”
This uses the student as an instrument of the state’s purposes. Public education should be for the commonly shared cause of preparing students with a well-rounded education related to many roles in which they will find themselves, not only their roles as workers but the full spectrum of being a member of society. Specialized education should be in the private domain. Using our educational system for the primary purpose of training students to be workers in a state-owned industry is not education, it’s indoctrination, and not exactly, “the American way”.
Communism is a type of government as well as an economic system (a way of creating and sharing wealth). In a Communist system, individual people do not own land, factories, or machinery. Instead, the government or the whole community owns these things. Everyone is supposed to share the wealth that they create. Kids, Britannica
That “everyone sharing the wealth” part is mythological.
While the Maine Space Corporation, enacted under the Mills administration claims our public educational system as a facility for workforce training of a State-run industry, The Industrial Partnerships Act enacted under the LePage administration claimed it for use by private industrial interests.
From the perspective of an innovative private-sector business, I do not want to conduct training in a public school where proprietary innovations are made into public knowledge or potentially the property of the school in a public school system in which the University of Maine claims that any innovations taking place in its facilities are the intellectual property of the University whether the creators are compensated or not.
Creators need environments free of lurking intellectual property vultures. Fair intellectual property rights guidelines should be in the legal framework of the interactive network I envision. Ownership dispersed throughout the network is added protection against an overbearing ownership class claiming the rights to all individual creativity.
It is inappropriate to use the public school system to train the workforce of some corporations, paid for by taxing all workers and small businesses, or in the case of a municipality, property owners, but when your school charter has been discarded and replaced with the words “align with state law”, it’s not a local school anymore, it’s a state school.
The Wizards of OZ recognized the value of Andersen Design’s contributions to the field of ceramics by allowing us to teach how to make our original bodies and glazes if we opted to be a school. That is, as long as our proprietary glazes were not used on the forms that Andersen Design had created. Fractured Atlas banned teaching the making of our forms because they are made using a production process that made it possible to “create a handmade art affordable to the middle classes”.
What country am I in, Toto? How are these tactics different from those of a corporate raider?
Fractured Atlas targeted our glazes and decorating technique. If FA can identify the applicability of our glazes to the one-of-a-kind forms that FA finds acceptable, they might also perceive that Andersen Design is not your standard “large-scale production” that conventionally does not use unpredictable art glazes.
Teaching how to make our product was not banned for a museum which in the days of the cottage industry was a teaching institution that encouraged the use of new contemporary forms.
In the half-hour, it took to come up with a money-losing proposal for a museum that would be acceptable to the Fractured Atlas board, the museum` was provisionally called the Andersen Design Museum. Perhaps that name had a satisfactory ring to the board because it makes our company sound like something in the past.
The board must have been in a hurry to be done with us after taking twice as long, as usual, to arrive at a way to reject Andersen Design in its historical form, and was likely impatient to move on. It didn’t take me long to realize I didn’t feel comfortable with the name and preferred something more inclusive, landing on the American Museum of Designer Craftsmen.
But just now, after being beaten up by the system for so long for being a free enterprise, I thought, how radical would it be to make it a Museum of Free Enterprise? One could also have subdivisions such as The Museum of Free Enterprise Designer Craftsmen. The name can be decided when the board members come forth and make themselves known.
Update on moving thoughts:
While New Hampshire, being an exception to the decentralized economy that exists almost everywhere else, seems like a better place to be, moving locally is an easier and far less stressful move.
The reason for wanting to get away from the peninsula is because of the support that Andersen Design does not receive in economic development. The local Resource Center includes economic development on its list of resources but that only means business courses at CEI. That doesn’t get into any of the unique situations facing individual businesses. Is this due to an IRS code too, or claimed to be? The only help organizations give is one size fits all. At the same time, there is a cultural emphasis on “innovation” as long as it’s in the context of a public-privately owned space that can claim intellectual property rights over our innovations. Innovative creativity might be a product of individuality, which is otherwise discriminated against left and right, every which way we go, but individuality is a quality nurtured by the Andersen Design brand.
The IRS rules allow non-profit organizations to have for-profit subsidiaries, which in terms of public transparency function by the privacy rules of private industry, and yet, these same non-profit organizations cannot do anything to support individual businesses. Is a for-profit subsidiary of a non-profit organization, not an individual business? I’ve looked it up. It is considered a separate legal corporation:
For-profit subsidiaries of nonprofits
A nonprofit parent may establish a for-profit subsidiary because, for example, its leaders wish to engage in unrelated business activities that don’t directly pertain to the stated mission of the nonprofit. Otherwise, the nonprofit may be required to pay an Unrelated Business Income Tax, commonly referred to as UBIT. A nonprofit may also create a for-profit subsidiary in order to avoid possible risk and liability that might be directed at the original organization if the activities were carried out under its tax-exempt status. Candid
When a nonprofit like CEI creates loan programs for small businesses, the program directly benefits individual businesses but limits the benefit to better terms on debt capital. The for-profit investment subsidiary that CEI uses to distribute the loans is a special individual business receiving the benefits of debt-free capital via CEI. Why shouldn’t the private small business community have equal access to debt-free capital via fiscal sponsorship? It is the same relationship of the individual business to the organization as currently exists but with a different and better benefit.
My idea is to eliminate the middleman and reroute the debt-free funding directly to the individual business via fiscal sponsorship. However, this requires that the individual business do their fundraising which can be difficult and stressful for many. That is where the Museum as a network of local museums comes in. A locally based museum as a fiscal sponsor can provide support and space for fundraising activities, making it different from other fiscal sponsors that are often located at a great physical distance from the project.
The museum is a way of placing the present in a historical context, to see where we have been and imagine where we are going.
Ceramics is a field that has retained mankind’s fascination since the beginning of history, a natural portal through which to teach learn, and explore science, art, and technology, past, present, and future.
The museum would be a non-profit and the ceramics and other makers in the network would be private industries but both types of entities share in a common purpose.
In light of the contemporary state of wealth distribution, a Museum of Free Enterprise is of the moment, as free enterprise has been relegated to the fringes of society, but even as the fringes it is a beacon of hope for the new worker’s movement wanting an exit lane from a corporate culture that has built a wall between the working classes and the ownership classes.
Speaking of the new workers movement, just as I am writing this I came across an article published in February 2024 which is titled
Cottage Industry Revival; A Modern Twist on Contemporary Crafts
This is published by a start-up investment company in Dubai called Faster Capital. This is not the type of option I usually consider but it is surprising, interesting, and an indicator that a start-up investment company features cottage industries. That’s something different. No harm in finding out about it so I signed up to find out.
First Object: Retain Legal Counsel
A non-profit can invest in its for-profit subsidiary, but there are rules, a depth I haven’t explored.
The first project of the mission is to retain legal counsel which requires identifying whose legal council it is. There is me as a person who needs a probate lawyer to sort the identities out, the estate as another person, and Andersen Design is also legally, a person, but the system has a habit of picking and choosing which person I am and frequently the system’s methods of identifying who I am is a mis-march to the circumstance. The system recognizes the value of Andersen Design’s assets whenever those assets can be used to deny benefits, by conflating Andersen Design with me, such as denying me access to the services of a probono probate lawyer, but when it comes to identifying Andersen Design as an economic development resource, the system denies that the person known as Andersen Design has assets. The only explanation for this is that it is the effect of a vast wealth concentration and redistribution deep state conspiracy dedicated to wiping out the free enterprise sector, a mistake when the free enterprise sector is a tax-paying sector used to fund the wealth concentration & redistribution sector.
I however know that Andersen Design’s assets have value for economic development. The assets led to the concept of my project, and keep coming up in various interactions.
The first legal phase is probate which should be my expense. After ownership is established the next phase involves identifying what type of legal entity the elements of the project should be. The intangible assets of Andersen Design might be held in a trust. There would be a marketing entity, a design and research entity, production training, and a Museum of American Designer Craftsmen which will be a 501 (3) C so that it can serve as a fiscal sponsor for the designer craftsmen community.
How are those elements connected? That’s where defining what the entities are comes in, as you can see from this tale, all kinds of relationships can be used. If it makes sense this project could be formulated as parent and subsidiary relationships.
After the legal identity and relationship of the elements are defined, then there will be established terms of agreement based on principles, Two of the principles are (1) There is always room for independent negotiation (2) ownership of intellectual property rights is based on authorship, not on facilities. The author could be a corporation that employs others to develop ideas but the project is a heterarchical network, not a hierarchical fiefdom.
How to Fund?
If probate is a stand-alone project then it benefits only one individual and does not qualify for tax-exempt funding. Probate is complicated by the unusual nature of the assets. If probate were not complicated I could do it myself but it involves too much that I don’t understand.
Andersen Design has art and ceramic assets but until they can be combined with other assets, they cannot be readily converted to cash. A fundraiser would require space and community support. That is where the museum comes in as a tangible asset to serve the designer craftsmen community, but the museum doesn’t exist yet.
Wholisticly the project depends on probate being resolved, which makes the assets available for use and capable of benefiting an indeterminate number of people and so if the project is defined as one project of many parts, it fits the IRS rules. The IRS does not say that an individual cannot benefit from a donation, it says that a donation must benefit an indeterminate number of people.
I am the visionary of the project which in its present form represents years of research and development to put together the concept in the context of changing times. If I were paid at the rate directors of non-profit organizations are paid, that would enable me to finance probate as a personal expense, but first, the entity that is the project has to exist. If the project pays me for my services that still leaves the question of which entity is contracting the legal service.
Obtaining the funds to pay legal council is one thing and finding the right lawyer for the project is another. It is up to the lawyer if he or she wants to provide pro-bobo services. Volunteer Lawyers’ explanation for disqualifying me from applying for pro-bono legal services is because of Andersen Designs assets, which VLA sees as having the potential to lure the lawyer away from volunteering but that can be an incentive for offering pro-bono legal services, independently.
In the eyes of VLA, if I get through probate I will have the potential to offer an attractive and lucrative opportunity to the lawyer, one that VLA does not want to be made available to the lawyers it works with, lest it leads them to stop volunteering, (I am told) so to access such opportunities as an outcome of offering pro-bono services, the lawyer would have to identify his own pro bono projects, independent of VLA.
It would not happen immediately that I could hire a lawyer once probate is accomplished because intangible assets have to be combined with tangible and monetary assets to have the ability to be readily transformed into new monetary assets. Until then they are just non-monetary assets.
The legal services establishing the use of Andersen Design assets would be contracted by Andersen Design, requiring probate to be resolved, which would identify who has the authority to make decisions for Andersen Design.
Whether or not placing Andersen Design’s assets in a trust would make the trust the entity that contracts the legal services is beyond my legal understanding. These issues are phase two of the legal council’s task, after phase one, probate, has been resolved. I need to be working with a legal council sympathetic to the purpose of my mission. I, as a person, have a mission. The fact that I do not have a board, does not have standing in whether or not I have a mission. Individuals and free enterprises can and do have missions.
I could look into legal crowdfunders to get through the first steps that have to do with the Andersen Design assets but the museum can be treated separately, So let’s talk about the museum.
The Museum- A non-profit 501 (3) C fiscal sponsor
I started thinking about staying on the peninsula and what the ideal scenario looks like. Immediately my sites landed on obtaining the Village Store as a location for the Museum of American Designer Craftsmen.
The concept for the museum is small and accessible as opposed to large and institutional. The Village Store retains the appeal of traditional New England architecture, sitting on a grassy lawn, it stands out in its setting as a focal point of the Town. There is a space along the hillside road that could make a very nice welcoming setting for people to meet or socialize. There is a large barn-type building that could accommodate displays of larger works.
It would be encouraged for the museum to have the feel of a clubhouse. Small and micro-size entrepreneurs need their organizations. People in small businesses are used to dealing with unique problems. Interacting with other small entrepreneurs can be helpful and bring about new ideas and relationships.
There is no local community for small entrepreneurs, other than the Chamber of Commerce which is focused around the dining and accommodations industries. My idea is a community centered around independent designers and makers. It would be a resource for the unique needs of small entrepreneurs, an environment that might encourage collaboration. It needs people in central positions who love the process of creating both objects and communities. Shows would feature contemporary and historical makers of our local region and beyond, It would be great to have shows about new developments in technology that address climate change through original approaches toward technology. Crafts are technology.
The museum as a geographically dispersed network of museums would include in each location a space for traveling shows that would rotate throughout the network creating a larger sense of community.
And the museum as a fiscal sponsor of artisan workspaces brings ownership back to the middle class. This Town needs to create space for a middle because we are losing it and the current developers don’t care.
Procuring such a space as the Village Store would be possible if I could get a grant, such as the Watershed Center for The Ceramic Arts has received. Why not Andersen Design?
Andersen Design has been a dedicated partitioner in ceramic arts, making original contributions to the field. Andersen Design easily qualifies under fiscal sponsorship guidelines that “should generally be aligned with the overall mission of the sponsoring charity”
A fiscal sponsorship involves an existing 501(c)(3) nonprofit offering to provide its tax-exemption and associated benefits to another group, usually a charitable project. The project should generally be aligned with the overall mission of the sponsoring charity.
Donors wishing to support the activity give directly to the sponsoring organization, designating their gift to the activity. Tax-deductibility of the gift is provided by the fact that the sponsor has 501(c)(3) status. Foundation Group
Andersen Design is recognized in the field of ceramics and art and the project mission is an economic development project.
When looking around at what foundations and community organizations support, economic development is barely represented in the lower half of the economy. This is consistent with a feudalistic society that discourages upward mobility at the roots because the value of “the workforce” is in its usefulness to the ownership class. One is surrounded by talk about economic development but the real support one needs is unavailable.
Locally the museum could be a game-changer for the community but it takes a village (Store) to make it happen.
Mackenzie Andersen
Mackenzie Andersen is a sponsored artist with The Performance Zone Inc (dba The Field), a not-for-profit, tax-exempt, 501(c)(3) organization serving the performing arts community. Contributions to The Field earmarked for Mackenzie Andersen are tax-deductible to the extent allowed by law. For more information about The Field, or for our national charities’ registration, contact: The Field, 75 Maiden Lane, Suite 906 New York, NY 10038, phone: 212-691-6969. A copy of our latest financial report may be obtained from The Field or from the Office of Attorney General, Charities Bureau, 120 Broadway, New York, NY 10271.
