Foundations to protect artists and their work

The process is simply stated:  Organize a non profit corporation in the state of residence of the Artist, then, once approved by the Secretary of State, file an application with the IRS using form 1023 (Application for exemption).

1.  INCORPORATION:  NFP form 102.10 are the Articles of Incorporation under the Not For Profit Corporation Act in Illinois.  These forms can be located on Google at Illinois Secretary of State, then click on business services, and Not For Profit Corporations.  The form can be completed  in duplicate and mailed, along with the $77.75 filing fee, to the offices of the secretary of state in Springfield.  Completing the form requires a bit of forethought, however:
    

1. The Registered Agent must be a person with offices in Illinois (or whichever State is yours);
2. The Articles of Incorporation as a Non Profit (this form 102.10) once accepted by the State and incorporated, will be recorded in the county of residence of the registered agent);
3. Initial Directors (not less than 3) must be selected carefully, since they'll be key to implementing the purposes of the new Foundation.  New directors can certainly be added in the future and fundraising becomes more important.
4. The Purposes Statement at Article 4 must clearly identify this new non profit corporation as one which will ultimately qualify as a tax exempt, 501(c) 3 charitable, educational or research organization.  Do not do this without counsel.  The best way to inform yourself of this process is to read IRS publication 557 (available to download for free from the IRS at IRS.gov).  The Stated purpose must also include a reference into the manner of disposing (eventually) of the corporation's assets upon dissolution.  The gist of this, of course, is that only a similar, qualifying non profit may receive the assets.  This device is specifically designed to prevent Directors, or others interested in the collected artworks of the Artist (which are  going to be owned by your new Foundation) from personally benefiting from any distribution of the art.
5. Article 5 must be drafted to include a clear statement of the purposes of the new Foundation so that the IRS can clearly identify the charitable or educational purposes intended.  This description, usually prepared by either the Artist, or a family member at the direction of the Artist, can best be described as a list of goals or stated intentions, including how future artists may use and benefit from the proximity to the collected works of art in the Foundation.

If you've gotten this far, check in next week for a summary of the always exciting IRS application process described in Form 1023.  Future notes from this correspondent will keep you up to date on a range of topics all related to Artists and their Foundations.  Thanks for listening.  Knuckles