L3Cs and the Arts

I recently opened an art gallery ART EFFECT in the heart of Detroit.  Being an attorney who is fascinated with the application of this new vehicle, I decided to give it a whirl and open the gallery as an L3C.  Frankly, hardly anyone else knows that the gallery is operating as an L3C.  Most people would look at me funny if I tried to explain it.  However, it did seem to click with the artist I hired to run the gallery.  It helped me make sure that he and I were in alignment on goals.  And, being an L3C helped me convey just what it is I'm trying to accomplish to him.  I want to help the community, help emerging artists, but also make enough money to keep the doors open. 

I could've formed as a nonprofit, but in the art world, being a nonprofit you can't really serve as an advocate for any particular artist so well.  You are there to serve the art community as a whole, and not pick favorites.  But, this isn't what I wanted.  I wanted to find and support highly trained, highly talented, hard working artists who cared about showing their work in Detroit.  I could've just formed as a for profit LLC, but that somehow didn't quite feel like it aligned entirely with my mission.  Yes, I absolutely want to make money, but in the end, I will likely plow any profits back into the Detroit community in one way or another whether it's through economic development or arts funding.  The L3C just felt right for me at the time, and it still does.

In the back of my mind, I thought - you know maybe I can get foundation funding or government funding for this venture, as I'd like to further develop the building we are located in, into more usable space for studios and exhibitions.  I frankly just don't know if that will ever happen.  Most of the foundations that "get it" about program related investments and social entrepreneurism are way out of our league.  They only fund large, established organizations.  Everyone else still requires 501(c)3 status.  And I just can't see the city of Detroit being avant garde in the area of arts funding and hybrid entities.  But, I remain hopeful!

And, there are some questions in my mind that remain about what happens if I have to unwind this entity - the legal and practical aspects of it all.  But, beyond that it is very easy to form and run and overall I'm happy with it.  I feel like I'm writing a consumer report.

I am happy to serve as a guinea pig to real world a concept that might very well be a fit for nonprofit and for-profit clients of mine.  So far so good.