CultureTrust Guidebook V09!16!13

5/22/2018 CultureTrust Guidebook V09!16!13

1/65

GUIDE FOR PROJECTS


2/65

Guide for Projects, page 2CultureTrust Greater Philadelphia

"In order to change an existing paradigm you do not struggle to try and changethe problematic model. You create a new model and make the old one obsolete."

-- R. Buckminster Fuller

We built CultureTrust Greater Philadelphia to

Give innovation in the cultural community a business back office.

Close the knowing - doing gap in Philadelphia.(We know what needs to get done; we just dont have enough hands to do it.)

Provide affordable management to artists, creatives, historians, and preservationists.

Deliver more affordable management capacity to existing cultural nonprofits.

Reduce costly and redundant nonprofit infrastructure in our community.

Create a louder voice and stronger fundraising platform for small projects and organizations.

Build a safe haven for organizations in transition or reinvention.

Be an anchor and stabilizing force in an environment of economic uncertainty.

Support the infinite and unrelenting drive to do, to make, to save, and to create.

Do what you love to do. Leave the rest to us.


3/65


CONTENTS

PART I: Things to know before you join

1. A quick overview of CultureTrust Greater Philadelphia The CultureTrust story Is this the solution for me? What do I get, and how much does it cost? Whats the value? How does it work? How do I start?

2. A more complete introduction to CultureTrust Who should use this Guide Content overview and important terms A brief description of CultureTrust CultureWorks pledge of support Reasons to join CultureTrust Why working under CultureTrust is NOT fiscal sponsorship The charitable business model some trends for consideration

3. The support we share and how costs are allocated among Projects Your daily work life with CultureTrust How will my world change? A couple example use cases (fictional, of course) Core shared support things covered by base cost allocation Other shared support things that require additional cost allocation

4. How to become part of CultureTrust Three rules of the Project view of the world What is a Project? Project eligibility and limits on activities Project application and intake process

PART II: Things to know once youve joined

5. The basics of Project management with CultureTrust Basic roles and responsibilities what you do, and what we do The Project management process with CultureWorks At-a-glance information and deadlines

6. Managing my fundraising, marketing, and public image Ways you can receive charitable contributions Required charitable solicitation disclosure Approval of proposal and solicitation materials Tax deductibility Applying for a grant Asking for donations from individuals Seeking corporate sponsorship and membership Running benefit events and fundraisers Crowd funding and online contributions Receiving in-kind contributions Reporting, acknowledgements, credits, and record keeping Your Project retains its brand and image identity How to talk about your participation in CultureTrust Crediting policies and placements Graphic identity style guide and credit language


4/65


Documentation

7. Financial and human resources management The approval process Financial management forms Contracting templates Selecting and approving vendors and hiring personnel How to tell an employee from a contractor Vendor, employee, and contractors selection and engagement procedures Expense (payables) management policies Revenue (receivables) management policies

8. All the corporate and legal stuff you ever wanted to know How CultureTrust is legally structured Governance and risk management Working with children under 18 years of age Why operating under CultureTrust is NOT fiscal sponsorship Ownership of real property, collections, intellectual property, and technology Existing debt and other liabilities Balance of management powers: fiduciary vs. creative authority Long-term ownership of your Project or organization How a Project exits CultureTrust Document handling and records transfer


5/65


PART I

Things to know before you join


6/65


1. A quick overview of CultureTrust Greater Philadelphia

The CultureTrust story

The concept of CultureTrust Greater Philadelphia (or just CultureTrust) was inspired in late 2010 by anincreasing need for a better and more robust solution for managing artist projects (without their ownnonprofit) and small organizations in the cultural and creative community.

At that time Thaddeus Squire, and the newly formed management services organization CultureWorksGreater Philadelphia, had been experimenting with ways to deliver outsourced, holistic managementsupport to small cultural nonprofitsorganizations that struggle constantly to maintain even the mostbasic infrastructure. While the need for better shared services and support was intensified by themarket crash of 2008, this problem has been endemic to the cultural sector for quite some time.According to the Greater Philadelphia Cultural Alliance, roughly 70% of the organizations in the regionoperate with budgets of less than $1 million; 40% operate with budgets smaller than $250,000.

As CultureWorks was experimenting with delivering management services to small organizations, it was

also receiving frequent requests from individual artists and cultural producers for support and fiscalsponsorship for one-off projects and new initiatives. The increasing tendency of funders towardprojectsupporthas driven artists to work more and more outside of institutional contexts on a purely projectbasis. These projects need not the ability to raise charitable funds, they also needand more acutelydirect administrative support. The common pass through fiscal sponsorship models in the culturalsectoras offered by Fractured Atlas and the Painted Bride Arts Center, for instancesaddle the artistswith the liability and ultimate administration of the funds, something few artists are prepared for orinterested in managing. So just raising funds doesnt solve all of the challenges of individual artists.

In June 2011 Thaddeus participated in a meeting of a large group of Philadelphia performing artistsconvened by theatre artists Adrienne Mackey and Bradley Wren. The meeting was focused on newsolutions for managing individual artists projects. Two messages stood out. First, individual artists havelittle interest in starting new nonprofit organizations to address their fundraising and management

needs. They are wary of the cost and effort to start them, and the potential restrictions they mightplace on creative and team building flexibility. Second, they strongly desire more robust managementaccounting, compliance, contracting, insurance, human resources managementthan traditional fiscalsponsors, like Fractured Atlas, typically provide. But it needs to be easy to plug into and unplugfrom as people move from project to project.

Inspired by these stories, CultureWorks conducted extensive research locally in Philadelphia throughinterviews with artists and funders, and nationally through field scans, benchmarking, and researchinto best practices over 2011 and 2012. Extensive legal and operating modeling was done incollaboration with attorney Peter Gulia of Fiduciary Guidance Counsel, with leading studies written byattorney Greg Colvin, the national legal expert on fiscal sponsorship, and guidelines established byTides and the National Network of Fiscal Sponsors. As this research was under way, CultureWorkswrestled with the management services model it was offering. The time and effort needed to run the

program as a pure service (with the clients externalto the organization) was proving difficult toscale uptoo much time cost relative to the costs the clients could afford. The conclusion was that tobring this service to scale, CultureWorks would have to bring the projects and organizations in houseand serve as the direct manager and fiduciary. A new model was needed.

The result of this exhaustive research and hands-on learning was a decision to create a new program atCultureWorks following an established model first developed by the social service organization ThirdSector New England in 1959. We decided to build a comprehensive fiscal sponsorship-type program,delivered through a separate charitable entity, CultureTrust Greater Philadelphia, which we formed in2013. This seemed to hold the potential to solve a number of problems. Individual artists and producerscould obtain the management support they needed, including insurances. The cultural sector would


7/65


have a platform to share back office management with a wide range and number of projects andorganizations. Funders would get a model for funding projects and smaller organizations wheremanagement was more stable and consortium grantmaking would become easier. It provides a winfor multiple stakeholders in the cultural community and is only the second such program of its kind inthe country after Springboard for the Arts in St. Paul, Minnesota.

Ultimately, CultureTrust is the re-invention of CultureWorks former management services program in amore scalable and sustainable form. Instead of offering these services as an outsourced solution, theproject becomespart of CultureTrust, and CultureWorks, as Trust Administrator, can provide directmanagement and project oversight: better for funders, better for projects, and better for artists,curators, producers, preservationists, organization directors, and all of the people who are inspired ona daily basis to do, to make, to organization, and to preserve.

Is this the solution for me?

CultureTrust provides back office management, a charitable umbrella, and other benefits to

Projects led by individuals without a nonprofit or other corporate affiliation; Existing charitable organizations looking for more/better/cheaper back office support; Existing charitable organizations undergoing some sort of change or transition;

We support leaders of projects and organizations working in

All fields of the fine and performing arts (music, dance, theatre, visual arts, film/media); All fields of heritage and humanities (libraries, historic sites, archives, collections, letters); All fields of design and architecture (or anything with a design focus); Creative or cultural projects of various hybrid or unusual varieties not yet named.

CultureTrust may not be the solution for you if

You just want to be able to raise charitable funds and administer your project all by yourself; Your project or organization is very small in general scope and budget (i.e.,


8/65


What do I get, and how much does it cost?

[full-page info-graphic showing core shared resources/services and benefits and costs]

Core Support For 12% of your gross revenues (earned and contributed), you get:

o Fiduciary Oversight by a Board of Trusteeso Initial Project Assessment & Planningo Project & Financial Managemento Procurement, Contracting, & Contract Managemento Bookkeeping, Accounting, & Complianceo Bill Paying, Payroll Management, & Human Resources Managemento Receiving Revenue & Donor/Funder Reportingo Basic Insurances & Insurance Administration

Other Support - For additional costs, you can get:

o Workers Compensation Insuranceo Special Insurances:

o Healthcareo Real Property/Tenants Insuranceo Improper Sexual Conduct:o Employee Fraud & Thefto Non-owned & Hired Commercial Autoo Professional Liability

o Retirement Investmento Other Management Services

Whats the value?

[full-page info graphic on the three value propositions of CultureTrust: (a) Collective Value -Collaborative Fundraising/Management; (b) Capacity Value - Cost Savings/Capacity Building; (c)Consistency Value Safe Harbor for Managing Change ]

How does it work?

[full-page info-graphic showing the basic operating model/admin process for CultureTrust]

How do I start?

[full-page info-graphic showing the application and intake process]


9/65


2. A more complete introduction to CultureTrust

Who should use this Guide

We created this guide both as a reference resource for current members of the Trust program withprojects under CultureTrust, and as an informational overviewfor prospective members who want tolearn about how CultureTrust works.

There are two kinds of potential participants in CultureTrust:

1. Leaders of charitable cultural projects not yet associated with a nonprofit entity.CultureTrust is a resource for managing projects led by fine and performing artists of all kinds,makers, designers, architects, curators, organizers, producers, and presenters who are workingwithin the charitable, or nonprofit arts, cultural, or creative fields.

2. Leaders of existing or legacy nonprofit organizations in the arts and culture fields.CultureTrust also can serve as an efficient and affordable way to access back office supportfor existing nonprofits of all sizes. These services include accounting, financial management,compliance, board oversight, insurances, project and contract management, and others.

Content overview and important terms

In a general sense, this Guide is a short textbook on how to manage a charitable organization orProject, outlining best practices and good risk management policies. The practices and policies wedescribe are in principle no different than those used by the leadership of an independent nonprofitorganization engaged in good management.

In a specific sense, this Guide explains how CultureTrust Greater Philadelphia (CultureTrust or thetrust) works. CultureTrust is a nonprofit 501(c)(3) trust (federal tax-exempt status pending) thatserves as the direct management and fiduciary umbrella for arts and heritage projects andorganizations operating in the Greater Philadelphia metropolitan area.

It describes how a Project (which can be either a charitable project without an nonprofit affiliation oran existing nonprofit organization) can become part of CultureTrust and operate under its mission. Itreviews the benefits and potential risks for a Project becoming part of CultureTrust, so you candetermine if this is the right management solution for you.

It explains how a Project Director (who is the person leading a Project) works with CultureTrust tomanage their Project. The Guide outlines the roles and responsibilities of both the Project Director andCultureTrusts Board of Trustees, who oversee all of the trusts Projects.

You will also find information about how the Project Director works with the Trust Administrator,which provides the management and day-to-day administrative staff for CultureTrust. The Trustees ofCultureTrust have engaged CultureWorks Greater Philadelphia (CultureWorks)to be the TrustAdministrator.

CultureWorks, which is also a nonprofit,is a service provider to CultureTrust. Both nonprofit entitiesare entirely independent of each other, with no overlap in governance. As the Trust Administrator,CultureWorks is the main point of administrative contact for CultureTrust Projects. CultureWorksconducts its administrative function through its Trust Program.


10/65


A brief description of CultureTrust

Mission Statement: CultureTrust Greater Philadelphia fosters sustainability and impact forcreative and preservation practice through providing affordable shared management resources

for arts and heritage programs of diverse disciplines and cultural traditions.

CultureTrust Greater Philadelphia is a nonprofit 501(c)(3) trust (federal tax-exempt status pending)that serves as the direct management and fiduciary umbrella for arts and heritage projects andorganizations operating in the Greater Philadelphia metropolitan area.

CultureTrust is governed by a Board of Trustees, which is responsible forfiduciary oversightof all ofthe trusts projects. The Trustees must approve any Project that wishes to operate under CultureTrust,and they set policies and engage other services providers to fulfill their fiduciary responsibilities.

CultureTrust contracts with CultureWorks to be the Trust Administrator. Under this agreementCultureWorks staff is responsible for many of the day-to-day, back office functions of CultureTrust,including bookkeeping, insurance and human resources administration, accounts payable/receivablemanagement, project intake and preliminary assessment, and general project management, among

other duties. The administrative face that CultureWorks provides for CultureTrust is representedpublicly by the Trust Program under CultureWorks. CultureTrust and CultureWorks, however, are fullyindependent nonprofits and do not share directors/trustees, legal counsel, or accounting firms.

CultureWorks pledge of support

We will not judge your creativity or interests. We do no take a curatorial stake; we are onlycommitted to helping your work achieve success as you define it.

Your work and other assets belongs to you. Copyright and ownership of your intellectualproperty remain with you, the maker, creator, preserver, collector, or producer.

You should spend your time making and preserving, not managing. We are here to do theadministrative heavy lifting so you have the time to make your vision real.

We will listen and respond to your concerns.If you are confused, concerned, or unhappyplease let us know. We are blazing new ground. We must learn and grow together.

Reasons to join CultureTrust

Managing risk

The principal reason for working with CultureTrust is to have an experienced co-pilot to help youmitigate risk and better ensure success in your cultural endeavors. Managing risk for a Project has manydimensions, most of which are aboutpreventative measuresas opposed to focusing on provisions tohelp you once things go bad. For instance, it is untrue that a waiver or similar legal document canprotect you from someone intent on suing you. There is no bulletproof protection against legal action,other than preventing failure or disagreement in the first place. So, risk management is not just abouthaving a good insurance policy and legal counsel. In our view it entails:

Good project planning There is no substitute for thorough and thoughtful planning. The appropriate management team Make sure the right people are on board. Sufficient insurance coverage Buy the right insurance for your work. Sound financial management policies Budget and manage your financial commitments


11/65


Best human resource practices Treat people fairly and in accordance with the law. Mindfulness of workplace safety Keep your employees and the public out of harms way.

Most of the resources and policies outlined in this Guide and offered through CultureTrust are aimed atpositively addressing these elements of holistic project management, which in turn is also good risk

management.

CultureTrust can perform a variety of functions

CultureTrust provides a potential solution for a number of organizational circumstances common todayin the cultural community.

The forever solution: You may consider CultureTrust as a permanent solution for a specificProject (or organization), or a succession of Projects over time. For some, this may be the bestsolution for providing consistent back office support for the long term. There is no expectationor pressure from CultureTrust to grow or get out. While it may serve as an accelerator, itis not designed with this sole function in mind, and would not impose on organization orProjects the restrictions typical of an accelerator.

The temporary solution: This may be the best management and support solution for anintentionally temporary or short-term Project or initiative. As the funding community hasmoved to a predominantly project-based funding approach, the cultural community hasfollowed suita coherent business model can be, Ill produce this project if/when a funderwrites a check, and when the project is over, Ill move on to another one. Artists and culturalentrepreneurs are eschewing the development of permanent infrastructure, so they can movemore easily from one project to the next. Beyond the changes in production model that havebeen wrought by funding policy, artists themselves are preferring the fluidity of a project-based world, which allows for an ever-changing succession of creative collaborations. Ideasassociated with organizationsfixed costs, boards, missionsare less attractive to makers, asthey appears as barriers to the increasing fluidity and mutability of creative practice.

A platform for building capacity toward independence: Though not an accelerator (aprogram aimed at growing organization to scale) in the traditional sense, CultureTrust can beused in that way. It is a particularly good solution for start-ups or legacy organizations that areseeking some stability while they grow (or re-tool) to achieve the next level of program,revenue, and staff capacity.

A platform for determining which model (nonprofit or for-profit) is best/desired: Today,many cultural entrepreneursin particular in the start-up arenaare developing concepts thatoccupy the grey area between business models that could go either for-profit (with a socialgood mission) or nonprofit (with an explicitly charitable mission). It is sometimes hard todetermine which is the best solution, both for the mission and the leaders/stakeholders. AllCultureTrust Projects must be charitable in nature. But a Project may start out underCultureTrust with a charitable mission, and if it wishes to go for-profit, it can leave our

platform and strike out in a different direction.

A platform for re-inventing a legacy organization and negotiating leadership transition:Existing or legacy organizations today, more than ever, are revisiting their program andbusiness models in response to dramatic changes in the philanthropic environment and generaleconomy. CultureTrust can provide a temporary safe haven or stable environment forexploring new directions and models, including transitioning from long-term or foundingleadership to the next generation of organizational leadership.

A platform for collaborative approaches to fundraising and project management:CultureTrust also serves as a platform for developing collaborative- or consortium-based


12/65


approaches to raising funds, either for a common initiative shared among multiple Projects, ora Project that involves multiple participants or partners. For instance, several historic sitesmight apply for support from one funder for a shared programming concept. Or, a Project witha consortium of discrete partners or collaborators may administer the Project throughCultureTrust as a neutral, third-party management platform.

A platform for exploring temporary or long-term mergers and partnerships: In similar spiritto the previous bullet, CultureTrust can provide a facilitated and stable context for exploringpartnerships and mergers of various kinds, both among Projects/organizations underCultureTrust and with those outside of our umbrella.

A platform for negotiating the wind up of assets: Finally, CultureTrust can provide an interimmanagement context for an organization or Project that desires to wind up its operationsand disperse its assets to other charitable purposes. CultureTrust does not offer legal advice orsupport around this process as part of its services, but can connect Project leaders toappropriate professionals and offer some facilitation around decision-making and process.

All this sounds good, but what, if anything, am I giving up by running my Project under CultureTrust?

In our view, the only thing that you give up as a Project of CultureTrust (as opposed to workingthrough your own independent nonprofit organization), is the ability to make high-risk-orienteddecisions. You and your board cannot establish your own appetite for risk; you must adhere to the riskmanagement provisions of CultureTrust. What does that mean?

You cant pursue your work without a complete and feasible plan, including goals, milestones,and a clear sense of impact and what constitutes success.

You cant start a Project that you will not be able to finish or deliverfor which feasibility islow and the risks are high for everyone involved.

You cant take on a financial commitment (sign a contract or make a promise) without havingmost or all of the resources in hand to cover that commitment.

You cant pay a bill with funds not designated for that bill (or that you dont have at all)youcant borrow, leverage, or otherwise rob Peter to pay Paul to get your Project done.

But why would you want to do any of the above? If the ability to do these things is what youre givingup, youre really not giving up anything of value to your mission and vision.CultureTrust was createdto help creators, curators and cultural leaders succeed in their work. We recognize that culturalprojects are highly speculative in nature, and that you will not have all of the resources to executeyour Project day one. Precisely for this reason, we have created a framework of policies and bestpractices coupled with support infrastructure that we hope will help you manage risk as you go, ensureyour success, and the continued growth and vitality of our cultural community.

Why working under CultureTrust is NOT fiscal sponsorship

We maintain that fiscal sponsorship has come be understood as an arms-length relationship, mostlythrough the preponderance of the pre-approved grant (pass-through) model. The distant relationshipand frequent lack of direct oversight between the sponsoring organization and the project has led towariness and caution on the side of institutional funders and sometimes even individual donors.

With CultureTrust there is no distance between the Project and the fiduciary organization.CultureTrust is 100% liable for delivery of the Project, which ensures the same level of oversight andmanagement that a program operating under an organization enjoys. The only difference is that


13/65


CultureTrust assumes no specific curatorial or content identity, thereby allowing for a wide variety ofcultural Projects to coexist under its missionsharing back office functionswhile retaining theirindividual Project identities.

For these reasons, we argue that fiscal sponsorship is a misnomer in the case of comprehensive fiscal

sponsorship. It is not fiscal sponsorship at all, in the arms-length sense that is most widely knownthrough the pre-approved grant model. It is instead a direct project relationship.

As a result, we do not use the terms fiscal sponsorship in connection with CultureTrust. Insteadwe say, is a program of CultureTrust Greater Philadelphia. This is thesimplest and clearest way of describing your relationship to CultureTrust.

The charitable business model some trends for consideration

The charitable (nonprofit) business model in this country has changed radically over the last severaldecades. There was a time when organizations could rely to a greater extent on foundation andgovernment support, and the support from these sources had some degrees of predictability. Today,foundation and government grantmaking is spread very thin and competition for funding is exceedingly

high. Also, with the increasing use of peer panel review processes, discretionary grantmaking hasdeclined, leaving no real prediction model for this kind of revenue. So, you cant really budget forgrants, unless you have the ability to wait until one comes through. In general, if you want morecontrol over when and how you do your work, we recommend keeping foundation and governmentgrant revenues at less than 25% of your operating budget.

The good news is that individual giving is as strong as ever, and more people in the nonprofit sector arethinking entrepreneurially about how to generate more earned revenues. Indeed, many organizations,which had relied on foundation and government grants are now re-tooling their business model to focuson individual contributions and earned revenues.

This leaves us with two fundamental business models and sets of assumptions:

The project-based business model, in which whenyou do the Project is flexibleyou do itwhen you have the funds to pay for it. A coherent business model can be, Ill do the projectwhen a grantmaker writes the check. In this approach, there is no assumption of ongoingactivities or long-term operations. The Project exists when and for how long funding exists. Inthis model, foundation and government revenues can be very high, since there is no need tobuild a prediction model for revenues over the long term, and you can wait until one (or more)funders comes through to begin to execute the Project.

The going concern or scalable model, in which you want/need to have much more controlover when and where your Projects activities occur, and you have fixed ongoing costs(salaries, retained services, etc.) that require monthly payment. For these models, grants arevery ill-suited, since they are hard to predict, take months to process, and carry low odds ofsuccess. To make this model work, you really need to focus on earned revenues and individual

giving, since these income streams are more readily controllable and allow for predictionmodels and performance analytics to be generated to help with budgeting, predicting cashflows, and managing ongoing operations.

As you consider the model for your Project, it is important to think about the relationship betweenrevenues streams (and when and how you can generate them) and expenses. For a going concern, youneed fixed (or reasonably predictable) revenu streams that can map to your fixed costs. For episodic,or more project-based models, you can often manage your risk by having both revenue and expense bevariable. Expenses need to be moveable in time depending on when grants or revenue is generated, sothat you are not left holding expenses without any money to cover them.


14/65


3. The support we share, and how costs are allocated among Projects

Your daily work life with CultureTrust How will my world change?

As you consider joining CultureTrust and take stock of the policies and procedures contained in thisGuide, you may be thinking, Boy, this looks like a lot of work and complexity! Is it worth it? Well, tohelp think about what its like to work with CultureTrust, we have included in the following section acouple of fictional use cases as samples.

This Guide does not just contain policies and procedures. It also contains valuable information on howto manage your Project and raise funds successfullya handbook on cultural management. TheCultureTrust website also contains a number of at-a-glance resources for keeping track of key dates, aswell as grant deadlines.

To reduce things to their most simple terms

You gain access to the following resources:

An expert core management staffa true co-pilot for your work Basic insurances and a set of legal instruments and tools to manage risk Your financial liabilities attached to an entity other than you (personally) or your organization Flexibility to plug into and unplug from CultureTrust as a management resource The ability to raise charitable funds without the hassle of managing your own nonprofit A cash-flow-friendly cost allocation structureyou only pay when you have funds to do so Access to affordable additional support for grant writing, marketing, and other needs

And your regular (monthly) administrative commitments relative to CultureTrust are basically:

A monthly administrative and strategy check-in with the Trust Manager (phone or in person) Once per month e-mailing in a payroll report for the previous month (if relevant) Twice per month e-mailing in other financial payment or contracting forms

Beyond that, you are raising funds and working on your Project, as you would with or withoutCultureTrust. Only with CultureTrust, you have a whole bunch of resources at your fingertips anda team of cheerleaders who are interested and committed to the success of your work.

We want you to spend less time managing and more time making.

A couple of sample use cases (fictional, of course)

(1) UNORGANIZED PROJECTS Artistic or cultural projects (short-term or long-term) without anonprofit corporation/umbrella or other management structure.

Mary Ann Theatrical is a theatre artist who wants to produce a new play, Mad Production X, andpresent it in Philadelphia. She decides to work with CultureTrust. She becomes a member of theCultureWorks at $40/month, for which she receives all of the benefits of coworkingcommunity, spaceto work and meet donors, technology, and professional development programming.


15/65


She fills out an application for CultureTrusta series of short narratives about her project and a set ofbudgets and submits them to the Trust Program. The Trust Manager at CultureWorks has somequestions and concerns about the project and works with Mary Ann to refine her proposal andstrengthen her project plan. CultureTrusts Board of Trustees accepts her project at their quarterlymeeting! Mary Ann signs a Subtrust Declaration Letter, and pays $150 to cover her share of General

Liability insurance. Shes now set up and she begins her fundraising and production work.

Contributions and grants are written to CultureTrust and deposited with her subtrust. As contractingneeds and expenses arise she submits purchase orders and contract requests to CultureTrust throughCultureWorks. CultureTrust pays her bills and contractors directly. She decides not to useCultureTrusts standard Performer Agreement, instead favoring an Actors Equity Association contract,which is no problem for CultureTrust. CultureTrust also provides all of her general liability, workerscompensation, and other insurances. She works from the coworking space and several times a month,she buys some time from the CultureWorks Fellows to help with grant proposals, donor letters, andmarketing copy. A month before the show, she holds a private reading and donor cultivation event inthe CultureWorks all-purpose space, and Mad Production X opens to rave reviews three weeks later.Following the production CultureTrust, with Mary Anns help, wraps up all of the projects business andcompletes all of the grant reports and donor stewardship.

BY THE NUMBERS: She spends $480 on her coworking membership for 12 months. Her project costs$75,000 to produce, and she meets her attendance and sales projections. For her Project, $9,000 isallocated (at CultureTrusts base rate of 12% of revenues) which covers project management,accounting, compliance, reporting, donor stewardship, the ability to receive contributions, and allinsurances. In addition, she buys 60 hours of Fellow time (@ $15/hour) for a total of $900.

For a $75,000 project, she pays a total of $9,900for a nonprofit umbrella, expert managementsupport, office space, a peer network, technology, and event/meeting spacesall of which she canunplug from as easily as she plugged in.

(2) NONPROFIT ORGANIZATIONS Entities with their own 501(c)(3), and possibly also material or

real property assets, but choose to secure their back office management and other coreinfrastructure through CultureTrust.

The Remarkably Historical House has survived over 200 years of American history, including cannonballfire during the Civil War and race riots in the 1970s. It has a small but committed group ofpreservationists and community members that rally behind its preservation and populate the board ifits nonprofit, Remarkably Historical House Inc., which was formed in 1979 in the wake of the post-Bicentennial historic house revival in America. Today it finds itself struggling to maintain a donor base,and grants seem to be dwindling by the year. Through an enthusiastic corps of donors and steadyvolunteer efforts it keeps its building nominally maintained, runs a series of interpretive programs, andmanages a modest annual budget of $85,000. Its core management and operating staff is made up ofvolunteers, and the Board contracts accounting services and other professional support as needed.

After careful consideration, the Board votes to transfer business operations of Remarkably HistoricalHouse to CultureTrust to save money on operations and increase the quality and amount ofmanagement support and fundraising reach. John Q. Preserve, president of the board, becomes a basicmember of CultureWorks Coworking Program at $40/month, for which he receives all of the benefitsof coworkingcommunity, space to work and meet donors, technology, and professional developmentprogramming.

John fills out an application for CultureTrusta series of short narratives about his project and a set ofbudgets and submits them to the Trust Program. The Trust Manager at CultureWorks has somequestions and concerns about the project and works with John to refine her proposal and strengthenhis project plan for the next season of programs at Remarkably Historical House. CultureTrusts Board


16/65


of Trustees accepts her project at their quarterly meeting! John signs a Subtrust Declaration Letter,and pays $300 to cover the Projects share of General Liability insurance. John and his colleagues arenow set up and can begin operating under CultureTrust.

Upon acceptance to CultureTrust the Board of Remarkably Historical House shifts all finances and

business relationships, including all insurances to CultureTrust. Remarkably Historical House Inc. (as acorporate entity) remains intact, but dormant, and retains legal title to the House and its collections,which are still under the fiduciary and stewardship control of the Houses original Board of Directors.CultureTrust, and its Board of Trustees, however, become the fiduciaries of Remarkably HistoricalHouses day-to-day operations. The Board of Remarkably Historical House Inc. no longer needsDirectors & Officers insuranceas financial activity and liability is no longer flowing through thenonprofitand it performs minimum compliance to retain the dormant Remarkably Historical HouseInc., in case in the future it should wish to exit CultureTrust and return to its prior operating structure.The Board becomes an advisory bodyand John the Project Manager for the Houses account underCultureTrust.

BY THE NUMBERS: Prior to joining CultureTrust, Remarkably Historical House Inc. paid on average eachyear $4,500 in general liability and directors and officers insurance, $4,000 in bookkeeping and CPA

fees, as well as $3,000 for grant writing and $4,000 for marketing and PR support (a total of $15,500 ingeneral administration per year). In addition, prior to CultureTrust, board members spent an averageof 8 hours per week on general administrative issuesmostly related to financial and contractmanagement. Under CultureTrust, it spends $10,200 to CultureTrust (12% of $85,000) for accounting,compliance, general management, and general liability and directors and officers insurance, and buys80 hours of Fellows time for proposal writing and marketing support at $15/hr. ($1,200) for a total of$11,400. Though only a direct cost savings of $4,100, Remarkably Historic House has gaineda flexibleand much more effective support capacity with administrative services it couldnt afford before. Thishas allowed John and his colleagues to focus more time on programs and fundraising.


17/65


Core shared support Things covered by base cost allocation

The above core resource cost allocation covers the shared support outlined below. Most of thesemanagement tasks are performed by CultureWorks under its Administrator Agreement withCultureTrust. All other essential costs unique to the Project are the responsibility of the ProjectDirector and other Project staff to deliver, such as artistic staff, production costs, marketing,fundraising, etc.any costs that are necessary to deliver the promised outcomes of the Project. Theseother costs are paid for by Project funds.

o Fiduciary Oversight by a Board of Trustees: All Projects will be reviewed, approved, andoverseen by CultureTrusts Board of Trustees, which has ultimate fiduciary responsibility for allCultureTrust activities.

o Initial Project Assessment & Planning: CultureWorks will administer the intake process fornew Projects for CultureTrust. The process of initially assessing Project feasibility will be avaluable service to Project Directors. CultureWorks recommends Projects to the Board ofTrustees of CultureTrust for approval. If a Project seems unfeasible, CultureWorks may makerecommendations for how a Projects concept and planning might be improved. CultureWorksmay also recommend participation in its other programs such as the Prep Program, which offersstrategic and business planning support.

o Project & Financial Management: Once a Project has been accepted by CultureTrust and theproject is set up and active, CultureWorks staff will monitor progress and advise ProjectDirectors on strategy. CultureWorks assists CultureTrust in ensuring that Projects meet funderrequirements, follow financial management policies and procedures, and attain successfuloutcomes.

o Procurement, Contracting, & Contract Management: CultureWorks manages the procurementand contracting of employees, independent contractors, vendors, and other resources, withinstruction from the Project Director. CultureWorks may recommend service providers andvendors that might benefit a Project, where appropriate or requested.

o Bookkeeping, Accounting, & Compliance: CultureWorks performs all bookkeeping, accounting,and fund management for all Projects. It also supports the annual compliance process forCultureTrust in cooperation with the independent accounting firm hired by the Trustees. Thisincludes preparing information for CultureTrusts financial statements, IRS Form 990, 1099 andemployer tax filings, Pennsylvania Cultural Data Project filing, and registration with the Bureauof Charitable Organizations (BCO). The Trustees are responsible for completing all of thenonprofit compliance processes and reporting to regulators for all of the Projects under

CultureTrust.

o Bill Paying, Payroll Management, & Human Resources Management: CultureWorks will alsomanage all accounts payable and receivable, including bill paying and management of payrollservices for those Projects with W2 employees. CultureWorks will perform many of the tasksthat a human resource manager would, including assisting with job postings/descriptions, offerletters, employee benefits administration, and providing advice on general human resourcesbest practices.

Core supporting resource costs are allocated at a base rate of 12% of gross receipts (earned andcontributed) for the Project. Allocations are assessed once a month on all new receipts.


18/65


o Receiving Revenue & Donor/Funder Reporting: CultureTrust is the receiver of all Projectrevenues, both those contributed from donors and funders and earned revenues from allsources (tickets, merchandise, licenses, service fees, etc.). All of these transactions aretracked for donor/funder reporting and analyzing financial performance. CultureWorks alsomanages all donor acknowledgement and funder reporting, in collaboration with the Project

Director.

o Basic Insurances & Insurance Administration: CultureTrust will maintain Directors andOfficers and General Liability insurances as part of the base cost allocation. If a separatelyorganized charitable corporation has its own General Liability insurance that is satisfactory tothe Trustees and provides satisfactory coverage to CultureTrust, the Trustees may consider adifferent allocation to be charged against such a subtrust. All projects fall under the Directorsand Officers insurance of CultureTrust. This insurance covers legal costs for the Trustees if theyshould be involved in a legal dispute concerning a Project. This insurance does not pay fordamages or monies owed to creditors.

While General Liability and Directors and Officers insurances are included in the base rate of12% of gross receipts for all Projects, we require that all projects allocate in advance (as a

pre-paid expense) their share of General Liability insurance to make their Project activeunder CultureTrust. No Project is active until the Project buys into CultureTrusts GeneralLiability policy. CultureTrust will then deduct this expense from its accounting of the firstadministrative cost allocations made from your subtrust account.

Finally, CultureWorks, in its function as administrator, will provide assistance and support insecuring special insurances (see below), providing proof of insurance for contract compliancepurposes with vendors, and administering claims-related work.

Other shared support Things that require additional cost allocation

REQUIRED

o Workers Compensation Insurance: CultureTrust requires Workers Compensation insurance forall contractors and employees of Projects and will allocate the appropriate cost of thisinsurance to each Project. This insurance is not included in the 12% base cost allocation.Workers Compensation insurance is billed out per each Projects current WorkersCompensation insurance rate for CultureTrust, which may change from time to time based onthe term of the policy and the kinds of Projects that are active. The cost allocated to anindividual Project is based on the total payroll (1099MISC and W2) for the Project for theduration of the policy, or the duration of the Project, whichever is longer. If the policy ratechanges in the middle of a Projects duration, the effective rates for calculating costallocations to Projects will change, and Project Directors will be notified of the change in rate.

Beyond the core support allocation, CultureTrust requiresall Projects to maintain WorkersCompensation Insurance, and this insurance is subject to an allocation above base costs inproportion to the Projects payments to contractors and employees.

There are also a number of resources that are optional for Projects operating underCultureTrust. These resources also bear additional cost allocation, should the Project Directorwish to take advantage of the resource.


19/65


OPTIONAL

o Special Insurances: Projects may require special insurances, whose costs are allocated to therelevant Project, per its needs and exposure. These insurances include, but are not limited to:

o Healthcare: Assuming CultureTrust maintains two or more W2 employees at all timesamong its Projects, the trust will be eligible to take out a group healthcare insurancepolicy in which any CultureTrust employee may take part. Separately brokered healthinsurance policies or special coverages may also be obtained.

o Real Property/Tenants Insurance: Your participation in CultureTrust constitutes aninsurable interest in any real Property that the Project may own, or in leasedproperty in which the Project operates. This allows CultureTrust to take out insurancein its name for a Projects real property, which can include furnishings, equipment,special collections, artwork and other assets. Savings may be achieved through multipleProjects taking part in one real property insurance policy. For instance, several historicsites may collectively buy their property insurance, and provided there is no substantialclaims history, the cost of the coverage may drop through aggregating risk.

o Improper Sexual Conduct: If your Project works with children under the age of 18years of age, your Project will need to take out insurance coverage for Improper SexualConduct.

o Employee Fraud & Theft: If your Project has multiple employees handling assets orprocesses that offer a substantial risk of fraud or theft, additional insurance can beobtained to cover such exposures.

o Non-owned & Hired Commercial Auto: If your Project frequently rents automobiles,and you dont want you or the Projects employees to bepersonally liable, additionalnon-owned and hired auto insurance will need to be purchased.

oProfessional Liability: If your Project provides any services that present substantialmalpractice risk of doing harm to clients or customers, then your Project may need topurchase additional professional liability coverage.

o Retirement Investment: As the employer of employees allocated to Projects, CultureTrust willestablish, maintain, and administer a retirement plan under Internal Revenue Code 403(b).Through pro bono contributions from registered investment advisers, well make retirementplanning education and investment advice available to CultureTrust employees.

o Other Management Services: In addition to the above additional services, we will be able tooffer on an hourly basis, through our staff and CultureWorks Fellows, other managementsupport, such as grant writing, individual donor campaign management, business and strategicplanning, marketing and branding support, and other services.


20/65


4. How to become part of CultureTrust

Three rules of the Project view of the world What is a Project?

Since CultureTrust supports Projects, we should define what constitutes a Project. We haveestablished three basic rules of our Project-based approach:

1. Have a goal and a timeline.CultureTrust takes a project-based view of the world, regardless of how long a project takes tocomplete or how biga Project is in budget or production scale, you need to define a beginning, end,and set of outcomes/deliverables for your Project.

For leaders of cultural projects that do not have a nonprofit organization, it is possible to producemultiple, successive projects. Each Project, however, must go through a re-application and acceptanceprocess. The re-application process, though, will be less involved, as much of the key attributes of theapplicant will be known to our staff and board. Or, you can apply for several Projects together, if they

constitute a discrete initiative.

For leaders of existing or legacy nonprofit organizations or episodic/ongoing initiatives, you candefine your Project as a discrete period of organizational activity, such as a concert or programmingseason, or a series of programs or initiatives. As with Projects without an organization, each Projectcycle must go through a re-application and approval process.

2. If youre in for a dime, youre in for a dollar.Because CultureTrust assumes 100% of financial (contractors, employees, vendors) and insuranceresponsibility for the Project, your subtrust account needs to receive all of the revenue related to theProject. If CultureTrust is paying all of the bills, it needs to receive all of the revenue.

This includes allcontributed revenues (donations, grants, in-kind contributions), and earned revenues(from ticket/merchandise sales, program/service fees, sponsorship). Note that this is one of the chiefdifferences between CultureTrust and the popular pre-approved grant model (such as Fractured Atlas).The latter only deals with contributed revenue, because the main purpose of the model is to allowProjects without charitable status to solicit contributions. This is not the main focus of CultureTrust.We are interested in providing more comprehensive, efficient, and effective administration of yourProject, which necessarily requires a holistic embrace of revenues and expenses.

3. You cant split the baby.Similar to the above, if CultureTrust is assuming all of the insurance liability for your Project, youcannot split cost and revenue centers with other partners or organizations.

For instance, if you should want to apply for a grant through an organization other than CultureTrustand youre successful with the application, the grant funds still need to ultimately be received by yoursubtrust account at CultureTrust.

You might argue that you could split both cost and revenue centers off to another organization. Forinstance, your grant might pay for three artists to make work for your Project, and you could arguethat if the funds were raised through the other organization, and the fees to those artists were alsopaid by that organization, then there shouldnt be a problem. Not so. Since CultureTrust is assumingliability for the entire Project, it needs to retain control over how funds are raised, contracted, andpaid out for all aspects of the Project, making the above scenario of splitting both cost and revenuecenters problematic.


21/65


Project eligibility and limits on activities

Projects seeking to join CultureTrust must comply with the following eligibility and criteria:

1. Charitable Status: The Project must comply with the guidelines for exempt activities undersection 501(c)(3) of the Internal Revenue Code. Furthermore, the Project must fall within thefields of arts, heritage, or creative work, per the mission of CultureTrust.

2. Quality of the Concept/Organization: The project or organization (if applying as separatelyincorporated nonprofit) must demonstrate value or significance with respect to the field inwhich it is situated.

3. Impact Model: The Project must articulate a clear set of goals and a clear model forwhom/what it intends to impact and how. All Projects must also demonstrate their ability tobe financially accessible to under-served populations, through offering some manner of free,discounted, or otherwise specially delivered programs and services.

4. Quality of Leadership:The Projects leadership and core team must be able to complete theProject in accordance with donor and funder expectations. Both the concept for the Projectand the leadership need to be assessed as strong and meriting support. Leaderships trackrecord in fundraising and earned revenue generation as well as creation and production will bea key factor in this point of the assessment.

5. Quality/Relevance of Key Staff & Contractors: The Projects prospective key vendors andpersonnel must also be sufficient (in number and function) as well as overall quality andreputation for CultureTrust to be assured the Project will be completed.

6. Project Context & Timeline: We must understand the context for the Project within theoverall work of the Project team or Leader, as well as evaluate the feasibility of the proposedtimeline and implementation of the Project.

7.

Financial & Delivery Feasibility: The Project must submit both a Contingency and a FullProject Budget, including detailed revenue plans for both. CultureTrust must be satisfied,based on the past fundraising and marketing track record of Project leadership, that 100% ofthe cash and in-kind resources named in the Contingency Budgetare likely to be achieved inthe time frame proposed for the Project.

Owing to limits on our insurance and risk management policies, we cannot accept projects that:

Involve open flame, pyrotechnics, fireworks, or other incendiary devices since this is notcovered under our General Liability insurance policy;

Involve regulated hazardous materials - since this is not covered under our General Liabilityinsurance policy;

Incorporate live animals or insects - since this is not covered under our General Liabilityinsurance policy;

Take place within the State of New York Since New York State has very different insuranceregulations, and our current insurance policies do not accommodate these regulations.

NOTE: If your Project involves direct work with children under 18 years of age, you may need toprocure additional special insurance and undertake background checks and other specific hiring,training, and supervisory procedures. See Section 8, Working with children under 18 years of age formore details.


22/65


Project application and intake process

STEP 1 Talk or meet with us. To save time and effort and address and questions not answered by thisGuide, we recommend that you speak or meet with a member of CultureWorks staff before completinga full application. Sometimes a short phone call is all thats needed; other times, a more in-depth

meeting and discovery is needed to troubleshoot Projects with unusual parameters and circumstances.You may contact Liz Sytsma at lsytsma [at] cultureworksphila.org or 267 597 3804 or Thaddeus Squireat tsquire [at] cultureworksphila.org or 267 597 3803.

STEP 2 - Complete and submit an application. A rigorous review process is undertaken byCultureWorks staff before a Project is recommended to the Board of Trustees of CultureTrust foracceptance. CultureWorks staff will send you electronically an Application Packet, which is notavailable online. Project Directors must complete the application, which includes the following:

a. Narrative Description A maximum two-page description of the Project, including itsmain personnel and other key vendors/resources and expected outcomes and/orpromised deliverables, addressing key questions about your Project.

b. Full Budget A full or ideal budget for the Project, including both revenues (cash andin-kind) and expenses (cash and in-kind), using a standard set of accounts.

c. Contingency Budget A contingency budget for the Project, including both revenues(cash and in-kind) and expenses (cash and in-kind), using a standard set of accounts.

d. Plan of Work A general timeline and overview of major implementation steps,milestones, and resource allocations.

e. Key Personnel Bios Short bios for key personnel, contractors, vendors, or any otherhuman resources that are essential to the success of your Project.

f. General & Special Insurance Applications You will need to fill out a standardinsurance application to be included in CultureTrusts General Liability insurancepolicy, so we can assess costs and liability exposures for your Project in advance. Also,if your Project requires any special insurance coverage, additional applications may berequired. (See optional insurances on page 11.)

g. Additional Materials as Requested CultureWorks staff may request furtherclarification, revision, or additional information. For instance, unlike mostgrantmakers, we will not require bios or qualifications for all Project personnel andvendors, since most will be local and known to us. But we may request that a Projectprovide more information for key personnel/vendors before the Project is accepted.

Below are the steps to becoming a Project of CultureTrust.

Please note that you are not part of CultureTrust and cannot represent to other parties thatyou are part of CultureTrust until all four of the below statements are true:

Your project has been approved by the Board of Trustees of CultureTrust. You have signed a Subtrust Declaration Letter. You have deposited/allocated your Projects full share of General Liability insurance. You have signed up for a coworking membership with CultureWorks (at any level).


23/65


STEP 3 - Project review by CultureWorks. With these application materials in hand, CultureWorksstaff will review the Project and determine if it meets the core assessment criteria. If a Project doesnot meet all of the criteria, or if there are questions or aspects of the Project that are not sufficientlyclear, CultureWorks will seek clarification and/or make recommendations about how it may beimproved or further developed to meet criteria.

STEP 4 - Project approval by CultureTrusts Board of Trustees.If the Project meets our criteria foracceptance and seems feasible and well planned, CultureWorks staff will recommend the Project tothe CultureTrust Board of Trustees. Projects must be accepted by the Board of Trustees during one oftheir quarterly meetings or, if CultureWorks is convinced there is urgent need for approval, throughunanimous electronic written consent of the full Board. The quarterly meeting schedule of the Board ofTrustees will be posted on the CultureTrust website.

STEP 5 Join CultureWorks coworking program. As part of CultureWorks Trust AdministrationAgreement, membership (at any level) for the Project Director in CultureWorks coworking program isrequired for any Project under CultureTrust. Memberships are available starting at $40/month, andProject Directors must be members for at least six months or the duration of the Project, whichever islonger. This cost is additional to the 12% base administrative cost allocation made for all Projects

under CultureTrust.Membership fees may be paid to CultureWorks directly out of your Projectssubtrust account, or personally through other means and reimbursed from the Project account. You willneed to sign up for coworking membership directly with CultureWorks by contacting Zach Lifton atzlifton [at] cultureworksphila.org or 267 597 3808.

STEP 6 Sign a Subtrust Declaration Letter and deposit/allocate your share of General Liabilityinsurance. As part of the final step in making your Project active, you must sign a SubtrustDeclaration Letter, which is the document that establishes an account under CultureTrust in the nameof your Project, and names you as Project Director. This gives you the power to instruct CultureTrustabout your Project, as well as whistle blow, if you feel that your Project is being mismanaged. ThisDeclaration Letter is not a contract and does not bind you individually to any liability, nor does itrequire you to have a corporation or other entity (or Employer Identification Number (EIN). It is simplyan operating agreement with you as an individual, explaining your responsibilities and powers.

Once you have signed a Subtrust Declaration Letter, you must deposit the full amount of your Projectsshare of General Liability insurance (if you are opening your Projects subtrust account without anyinitial cash deposit). CultureWorks will inform you of the amount of this cost, based on the insuranceapplication you submitted as part of your application. (See STEP 2.) This allows your Project to becovered by CultureTrusts General Liability insurance policy on day one, regardless of whether youhave any financial activity at the outset of your Project. If youre opening your subtrust account withenough cash to cover this amount, CultureTrust will simply allocate those costs directly to cover yourshare of insurance. In either case, this cost is deducted from the first 12% of administrative costallocations made from the revenues received by your Project. General Liability insurance is includedin the 12% overall administrative cost allocation for all Projects.

Congratulations! You are now officially a Project of CultureTrust Greater Philadelphia.

About General Liability Insurance: If your Project is accepted, the minimum funds required to activateyour account are the funds required to cover your share of General Liability insurance. By simply addingyour Project to an existing policy, you are saving considerable money in underwriting costs. For instance,a $150,000 Project may pay anywhere from $1,200 - $2,500 per year for a General Liability policy, muchof which are the minimum administrative expenses charged by the insurance company to underwrite andcreate the new policy. The same Project joining CultureTrust will be charged an incremental amount toextend the coverage of CultureTrusts existing policy, which would likely fall between $100 and $500 peryear for the example Project. This represents a substantial cost savings over buying your own policy.


24/65


PART II

Things to know once youve joined


25/65


5. The basics of Project management with CultureTrust

Roles and responsibilities what you do, and what we do

The responsibilities of the Project Director and her team:

Overall Project Vision & Leadership: The Project Director is responsible for the overall visionand direction of the Project, including developing the concept, key partners, selectingpersonnel, vendors, scheduling, and general production and leadership. The Project Director isthe Managing Director of the Project. You are the public face of you Projet.

Fundraising Leadership & Revenue Generation & Donor/Client Relations: You are chieflyresponsible for the financial health of your project. This means you are leading all fundraisingefforts, marketing, and the development and management of earned revenue streams. WhileCultureWorks will support your general development efforts administratively (such as reviewinggrants, offering informal advice, providing financial reports, etc.), you are responsible for allrequired reporting to funders and donor stewardship. Relationships with donors and funders areyour relationships.

Instructing CultureWorks: You are the chief point of contact and instruction for CultureWorksas its staff help you manage your Project. You are responsible for submitting all forms andfinance-related documentation, as well as any other documentation CultureWorks needs toensure your Projects success.

The responsibilities of CultureTrust & CultureWorks as Trust Administrator:

Fiduciary Oversight: The Board of Trustees of CultureTrust provide general fiduciary oversightfor all CultureTrust projects. The Board has ultimate authority to set financial and otherpolicies and approve expenses. They have contracted with CultureWorks to be theiradministrator and carry out the financial management policies outlined in this Guide.

Accounting/Compliance & Insurance/HR Administration: CultureWorks ensures that all of thecore administrative and management support is provided to CultureTrust projects, as describedin Section 4 of the Guide. These include, accounting, compliance, insurance and humanresources administration, bookkeeping, and some degree of Project management.

Contracting & Procurement: CultureWorks staff administers approved purchase transactions,vendor/service contracting, and employee contracting and payroll. CultureTrust maintains aset of standard contract templates, but may also use contracts provided by vendors, and willtake care of any legal due diligence, as needed. CultureTrust is also prepared to use standardunion contracts for the major arts-related unions: American Federation of Musicians (AFM),International Alliance of Theatrical Stage Employees (IATSE), American Guild of Musical Artists(AGMA), and Actors Equity Association (AEA). CultureWorks will administer any specialinsurance-related verification or documentation related to contract compliance.

Fundraising & Stewardship Oversight: CultureWorks will monitor, provide constructive inputon, and approve all grant applications, individual solicitations, and the reporting andstewardship process for the contributed revenues received by CultureTrust. The ProjectDirector is primarily responsible for fundraising and revenue generation, but CultureWorks willmonitor and support the fundraising process to ensure that best practices are followed. Forinstance, CultureWorks will formally acknowledge all individual donations and notify theProject Director about the gift and its particulars. It is up to the Project Director tocommunicate with the donor or funder and manage their relationship themselves.


26/65


Referring to Other Services/Resources: CultureWorks will also help connect you to otherservices, whether those are ones provided by CultureWorks other programs or providers withinthe general community.

The Project management process with CultureWorks

The core management rhythm for any Project under CultureTrust revolves around financialmanagement (expenditure and revenue generation) and contracting processes:

Monthly Meetings/Check-ins: CultureWorks checks in (either by phone or in person) with allProject Directors at least once per month to review status and progress, trouble shootproblems, and offer advice on strategy and implementation. A monthly review of you subtrustaccount will be included in this check-in, including a look at current payables and theupcoming flow of revenues and expenses to keep the Project on target.

Monthly Financial Management: CultureTrust will accept all receivables on an ongoing basis,electronically and by mail. CultureTrust will cut checks twice per month, on a fixed schedule.Emergency check cutting is available for a surcharge. Payroll for all Projects will be run onceper month at the top of the month for hours worked in the previous month. (See FinancialManagement below for more details.)

Communicating with CultureTrust

All communications and transactions with CultureTrust are managed by CultureWorks, and any in-person meetings or transactions are held at CultureWorks office (address below).

As a Project of CultureTrust, your chief point of contact is the PROJECT MANAGER:

Liz Sytsmalsytsma [at] cultureworksphila.org267 597 3804 T267 597 3811 F

All checks and hard-copy paperwork should be sent to:

Liz Sytsma, Project ManagerATTN.: CultureWorks Greater PhiladelphiaThe Philadelphia Building1315 Walnut Street, Suite 320Philadelphia, PA 19107-4701


27/65


At-a-glance Information and deadlines

COST ALLOCATIONS FOR SHARED RESOURCES

Included in 12% of revenue allocation:

Fiduciary Oversight by a Board of Trustees IncludedInitial Project Assessment & Planning IncludedProject & Financial Management IncludedProcurement, Contracting, & Contract Management IncludedBookkeeping, Accounting, & Compliance (first 100 revenue and expense transactions per Project) IncludedBill Paying, Payroll Management/Processing, & Human Resources Management IncludedReceiving Revenue & Donor/Funder Reporting IncludedBasic Insurances & Insurance Administration (General Liability/Directors & Officers Insurances) Included

Required, with additional cost allocations (above 12% base), all Projects:

CultureWorks Coworking Membership $40/mo. - $350Workers Compensation Insurance Varies per Proje

Required, with additional cost allocations (above 12% base), if applicable:

Every 100 transactions above the first 100 transactions over the life of the Project up to max of 13% 1% added to basProjects with >50% of revenues from Pew Center for Arts & Heritage or government (other than PCF) 1% added to basSales tax on goods sold (not including admissions or services) 8% of salesEmployer-Employee taxes ~11% of base wa

Optional for additional cost allocations:Special Insurances (health, professional liability, real property, tenant insurance, etc.) Cost per policyRetirement Investment Cost per matchCultureWorks Fellows $15/hourOther Consulting/Management Services Various rates

Rush order for cutting checks outside of normal accounts payable cycle $50/checkRush order for processing payroll outside of normal payroll cycle $80/processing Special payment transactions (e.g., money orders, certified checks, foreign transfers, etc.) $40 - $80/transaReturned check fees (for contributions made by check) Varies per transBrokerage fees for receiving gifts of securities (stocks, bonds, etc.) Varies per trans

KEY OPERATING DATES & DEADLINES

Financial management schedule:Monthly Project Management Meeting/Check-in Once per month, per 1:1 schedAccounts payable processed (checks available in 2 business days) 1stand 15t (or next business)Payroll processed (checks available in 2 business days) 5th(or next business)All Project accounts reconciled and previous months reports available 15t (or next business)Payroll reports issued with two-month payroll allowance forecasts 15t (or next business)Administrative cost allocations booked for previous months activity 1st(or next business)Workers compensation insurance allocations booked for previous months activity 1st(or next business)General liability insurance costs estimated and allocated (lump sum) Once per year, per policy cycle

Important deadlines:Request and reconciliation forms due for accounts payable processing 10am on 1stand 15t (or next buPayroll reporting forms (1099 & W2) due for payroll processing 10am on 1st(or next business)


28/65


6. Managing my fundraising, marketing, and public image

Ways you can receive charitable contributions

CultureTrust was formed in 2013 and is in its first fiscal year (ending June 30) of operations, so its firstfull year of operations is Fiscal Year 2014 (July 1, 2013 June 30, 2014). During this formative time,CultureTrust is being fiscally stewarded by CultureWorks Greater Philadelphia, which was formed in2010, has three years of financial and program history, and has received its 501(c)(3) tax-exempt statusfrom the Internal Revenue Service. So, depending on funder requirements, there are two options forstructuring charitable transactions for your Project:

Option 2: Indirect Grants & Contributions through CultureWorks

If a grantmaker or donor requires submission of an IRS tax letter, a certificate from the Bureauof Charitable Organizations (BCO), and/or more than one year of programming and financialhistory, you will need to run the grant or contribution through CultureWorks. You would makethe following representations on application forms and in solicitation materials:

In any place an applicant name is needed:CultureWorks Greater Philadelphia

Checks, grant agreements, and other legal or banking documents are made out to:CultureWorks Greater Philadelphia (Memo: )

The Federal Employment Identification Number (FEIN) for CultureWorks is: 90-0619374

The Dun & Bradstreet Number (DUNS) for CultureWorks is: 04-407-9837

Date of incorporation is: July 1, 2010 Entity type: nonprofit corporation (or corporation)

Date of tax exemption is: May 16, 2012 Exemption type: 501(c)(3)

Option 1: Direct Grants & Contributions to CultureTrust

You may have donors and funders make fully tax-deductible contributions directly toCultureTrust Greater Philadelphia, BUT you must also disclose to those funders that thefederal tax-exempt status of CultureTrust is pending. Most individual donors and some

institutional funders should be fine with this status, and you would make the followingrepresentations on application forms and in solicitation materials:

In any place an applicant name is needed: a program of CultureTrust Greater Philadelphia

Checks, grant agreements, and other legal or banking documents are made out to: of CultureTrust Greater Philadelphia

The Federal Employment Identification Number (FEIN) for CultureTrust is: 46-3109411

The Dun & Bradstreet Number (DUNS) for CultureTrust is: XXXXXXXX

Date of incorporation is: July 1, 2013 Entity type: charitable trust (select other if not listed)


29/65


ALL Earned Revenues Go Directly to CultureTrust

All earned revenues, including contracts, admissions, sponsors, fees, merchandise, and other

such transactions should go directly to CultureTrust:

Wherever a contractor or payee name is needed: a program of CultureTrust Greater Philadelphia

Checks and other legal or banking documents are made out to: of CultureTrust Greater Philadelphia

The Federal Employment Identification Number (FEIN) for CultureTrust is: 46-3109411

Date of incorporation is: July 1, 2013 Entity type: charitable trust (select other if not listed)

Date of tax exemption is: pending Exemption type: 501(c)(3) (status pending)

For the Purpose of ALL Applications & Solicitations

The business address for all mail is:

c/o CultureWorks Greater PhiladelphiaThe Philadelphia Building1315 Walnut Street, Suite 320Philadelphia, PA 19107-4701 | USA

Executive Director/Chief Executive Contact Information:Thaddeus Squire, Managing Director & Trust ExecutiveT: 267 597 3803 | C: 215 760 1634 | F: 267 597 3811 | [email protected]

Project/Program Director Contact Information:, Project DirectorT: her telephone | C: her cell | F: 267 597 3811 | her e-mail address

Website/URL: http://www.culturetrustphila.org AND/OR http://www..org


30/65


Required charitable solicitation disclosure

You must include the following charitable disclosure language on any solicitation letters, fundraisingbrochures, web pages, e-mails, pledge cards, business reply envelopes, and any other documents(electronic or hard copy) where contributions are being directly solicited.

For direct grants and contributions to CultureTrust:

is a program of CultureTrust Greater Philadelphia, a charitable trustdeclared in the Commonwealth of Pennsylvania. The federal tax-exempt status ofCultureTrust Greater Philadelphia is currently pending. For financial and other information onCultureTrust, please contact the Trust Administrator, CultureWorks Greater Philadelphia at267-597-3803 or [email protected].

For indirect grants and contributions through CultureWorks:

is a program of CultureTrust Greater Philadelphia, which operates underthe fiscal stewardship of CultureWorks Greater Philadelphia. A copy of the official tax-exempt

501(c)(3) registration and financial information for CultureWorks Greater Philadelphia may beobtained from the Pennsylvania Department of State by calling toll free, within Pennsylvania,1-800-732-0999. Registration does not imply endorsement.

Approval of proposal and solicitation materials

All grant proposals, reports, corporate sponsorship proposals, fundraising campaign and individualsolicitation materials must be reviewed and approved by CultureWorks before being submitted. We donot need to review every attachment, just the principal content documents, which are as follows:

For foundation and government grants and corporate sponsorship proposals: Letter of Intent (LOIs) Application Cover Sheet and/or Cover Letter (if applicable) Main Application/Proposal Narrative Text(s) Project/Proposal Application Budget and Benefit Levels (if corporate sponsorship) Grant Report Narrative/Budget & Report Attachments (both interim and final)

For individual solicitations, giving campaigns, fundraising events, and crowd funding: Solicitation Letter (one example if a mail merge/bulk mailing) Giving Brochure or Packet (if one is being used) Gift Reply Envelope and/or Pledge Card/Form (if one is being used) Fundraising Event Invitation (and possibly other materials) Main Narrative Text & Benefit Levels (for crowd funding)

Review and approval process and timeline

We ask that you allow CultureWorks two business daysto review any materials submitted, whichmeans that you need to send your materials to the Project Manager by 10:00am at least two fullbusiness days prior to a grant deadline or mailing/posting date. We will return your materials to youno later than 10:00am three days later (which is actually two full days of review). Expedited review(less than two business days) of materials carries a fee of$50 per proposal, solicitation, event, orcampaign (including all relevant documents). We cannot guarantee that expedited review will be

possible in all cases, and will assess availability on a case-by-case basis.


31/65


When calculating your deadline, you must get us things two business days PRIOR to the date of thedeadline. The date of the deadline does not count as one business day.For instance, if yourgrant deadline is 5:00pm on Friday, October 15, you must have your materials to the Project Directorfor review by 10:00am on Wednesday, October 13. If you miss the main deadline, and expeditedreview is not possible, you will not be permitted to submit your grant (if it is a hard deadline).

What do we do when we review your materials

We check for any errors in data preparation or representation of your Projects relationship withCultureTrust. We also may make some recommendations about how your proposal may bestrengthened. If extensive revisions are necessary (in our opinion), we may recommend that you seekadditional support through a grant or development writer in our network.

Managing the risks of matching fund requirements and donor benefits

We also check to see if what you are pledging/promising in the grant might represent a risk for theProject, if the grant or donation were to be awarded. The increasing focus on grant/gift matching inthe funding community can lead to Projects over-promising in budget size and deliverables. Gift

matching is where a funder requires (or encourages) a one-to-one (or greater) match for their supportto be raised by the Project from other sources. Calibrating and developing the worst-case strategy for agrant where matching is required can be a tricky business. What happens if you get the grant but cantmake the match? We will help you troubleshoot and manage the risks involved in this situation.CultureWorks has the right to prohibit a grant submission, campaign, or fundraising event fromhappening if we feel thatit is severely sub-par in planning and preparation, or if we feel the

proposal, campaign, or event may place the Project in financial jeopardy.

Tax deductibility

Tax deductibility for the donor only applies to charitable contributionsmoney that someonecontributes to your Project without any goods or service changing hands. There are two basic kinds of

revenues for any charitable Project:

Earned Revenues are cash funds your receive in exchange for delivering goods, services, orexperiences to buyers, customers, audiences, clients, etc. There is a clear exchange of benefitat the core of earned revenues.

Contributed Revenues are cash funds you receive from donors or funders (grants andcontributions from foundations or government agencies) where there is not an exchange ofbenefits. These revenues are sometimes called unearned revenues for this reason.

There are several common fundraising cases in which contributed and earned revenues are blendedthey are comingled in one transaction. In these cases, you must be mindful of whatpart of thecontribution is tax-deductible and what part is not. These cases are:

Membership, Crowd Funding, & Corporate Sponsorship Campaigns: All three of thesefundraising models usually entail perks or benefits corresponding to giving levels. At eachlevel, there is a set of benefits the Project offers the donor or funder. These may be freetickets, products, swag, free services, advertising opportunities, or other tangible items withcash values we can determine (or estimate). The total value of the benefit package (whetherthat is directly paid for by the Project or made up of contributed goods/services) should be lessthan the value of the cash contribution required for the given level, so that the contributionnets positive and the Project generates some net revenue.


32/65


In these cases, only the net amount above the value of the goods or services is tax-deductible,the cash value of the goods or services are not deductible. For instance, for a $500membership or sponsorship, the member or sponsor gets $150 worth of goods and services as abenefit. Therefore, only $350 of the contribution is tax-deductible. Acknowledgement lettersand gift receipts from CultureTrust will reflect this saying, Thank you for your contribution of

$500, of which $350 is tax deductible. Goods and services in the amount of $150 were receivedby the donor.

Fundraising (Benefit) Events: Fundraising events operate similarly, but often have a bit morecomplexity to them, or they present challenges in calculating the cash value of the benefits toattendees. The entertainments or amenities offered to attendees of the event do carry a valuethat should be factored into the tax deductibility of an event ticket price, if the event isticketed. (Not all of the value of the ticket may be deducted.)

o Ticketing: An estimated value per person should be calculated for the food, beveragesentertainment, gift bags, or other amenities offered to guests as part of their ticket.This value should be deducted from the value of their ticket to determine the true taxdeductibility of their ticket. For instance, out of a $100 ticket, you might calculate

that $50 is tax deductible.o Auctions (Live and Silent): For auction items (whether purchased by the charity or

contributed in-kind), the same logic applies. The true tax deductibility for whomeverwins the auction for the item is what they bided minus the fair market value of theitem. If they bided under the reserve amount (which is usually the fair marketvalue), then it is possible that none of what they paid is tax deductible, even if thecharity nets cash because the item was contributed in-kind. CultureTrust will,however, issue an in-kind gift receipt to donors for any contributed goods or servicesused in an auction.

o Raffles: There are two raffle models common in fundraising: (a) raffles for goods orservices in which people buy chances at winning a good or service (where the good orservice can be bought by the charity or contributed in

Documents

CultureTrust Guidebook V09!16!13