What exactly is an artist cooperative? It’s an autonomous arts organization, enterprise, or association jointly-owned and democratically-controlled by its members.
Artist cooperatives are legal entities that typically provide professional facilities and services for its artist members, which may include studio space, workshops, equipment, exhibition galleries, and educational resources. Depending upon the legal structure, all economic and non-economic benefits and liabilities of the cooperative are shared equally among its stakeholders. Cooperative members elect their governing board from within the membership, though patrons are often asked to serve.
The primary purpose of these organizations is to promote and sell the artworks of the stakeholders.
Use and Benefits
The most common of artist cooperatives serve as gallery space for its visual artists; some specify the type of visual art, such as photography or arts and crafts. Other cooperatives have been formed in other disciplines, such as music, improvisational art, theatre, even storytelling. In all cases, the stakeholders work collectively to promote and market their art.
Another fairly common use of an artists’ cooperative is the training of students. Classes, workshops, and demonstrations are regular parts of the periodic, weekly activity in the cooperative’s space; the revenues generated by these activities provide support for basic operating expenses, such as rent and utilities. Most cooperatives also serve as a source of information about the art discipline offering lectures and demonstrations on a regular basis, as well as special shows featuring student or guest work.
Successful artist cooperatives have found that serving as a community-based entity has additional benefits. If space allows, they offer it for social gatherings and/or meetings of nonprofit and/or community-based organizations. If size and accommodations allow, rental income for larger gatherings helps to sustain the cooperative. If the space doesn’t warrant a rental fee, these activities still bring potential new customers into the artists’ space.
Artist-run spaces have been recognized as a factor in urban regeneration. This effect was particularly strong in Glasgow, where the city won the accolade ‘European Capital of Culture’ in 1990, largely due to its large number of artist-run exhibition spaces and galleries. Curator Hans Ulrich Obrist coined the term “The Glasgow Miracle” to describe this.
The major advantage to artist cooperatives is their ability to promote the stakeholders, while they share the costs. Artists must also be a business person, completing the multitude of business operations while managing their career. The cooperative allows the individual artist to share these non-arts activities: managing and paying for studio and exhibit space, marketing and advertising their creations, and even cleaning chores. It makes sense to collaborate with fellow artists to get these non-arts activities completed. And it makes sense to pool rent dollars for a better location in a part of town exposed to up-scale foot traffic!
Another advantage is that a legal entity is capable of purchasing an insurance program for all members. Even if the artists pay for the insurance themselves, pooled risk management is always less expensive than individual risk management.
Additionally, the networking and educational opportunities allow the individual artists to grow. By simply sharing space, each is exposed to the others’ styles and methods. And, because the artists share space, each is exposed to the others’ client base.
A cooperative offers its customers advantages too: the opportunity to meet the artist, learn about the work’s inspiration and/or construction, and even learn about how to best care for the artwork over time. This, of course, leads to another advantage to the artist: a personal relationship with the customer.
But there are disadvantages too. The monthly dues, though less than if the artist is working alone, can’t be postponed. Even $100 a month may seem high if your product isn’t selling. And, not only are the financial responsibilities shared, but so is every decision. The font style on the new brochure, the paint color for the interior walls, even whether to build or purchase display cabinetry has to be decided collectively. If an individual artist is used to making such decisions alone, becoming a member of a cooperative may not be a good experience.
Structure – Legal Entity
There are three legal structures that an artist collaborative can take:
- Partnership. In this structure, the individual artists are partners in the entity; each holds a personal tax responsibility. In one type of partnership structure, most of the partners are silent, making no business decisions; this is probably not a good structure for an artists cooperative.
- Incorporation. A corporation is an entity recognized by the federal and state governments. Tax liabilities (to both governments) exist, but are born by the entity, not the individual shareholders.
- Nonprofit. This type is also registered by federal and state governments, and though there are annual filing requirements, there are no tax liabilities on profits to the entity. The personal assets of the artists are not in jeopardy.
A group/club is not a legal entity and has no tax liability to either a government or to its members. However, the individual members could be held liable for accidents or other incidents in their space, as well as individual sales. Insurance is mandatory for a group/club, as it is with all of these four types.
In all cases, the proceeds of the sale of an artwork results in a tax liability to the artist.
Talk to legal counsel before settling on legal status and insurance issues. Many attorneys are willing to provide pro bono advice. Community-based, large corporations may offer assistance from their legal departments. And, the internet lists others that offer explanations and even filing completions. In Georgia Georgia Lawyers for the Arts is a nonprofit organization dedicated to providing legal assistance to artists and arts organizations.
1) Specify financial and other responsibilities of member artists.
- Financial: Depending upon the legal status, equity members may have to ‘purchase’ their ownership into the new cooperative; these dollars are used for start-up funds. These may be sold back to the cooperative when the artist leaves; but most cooperatives don’t make enough money to ‘buy out’ a leaving member. Most require monthly fees from members to help maintain operational costs.
- Other: There are scores of responsibilities to be met and equity members must share these as well. These other responsibilities can be shared and/or required of other types of members (see discussion below). In most cases, there is usually a monthly fee paid by the stakeholders to cover operational costs (see discussion below).
2) Specify membership requirements, means, terms, removal and voluntary departure
- Requirements could be monthly financial contributions, volunteer staffing, business management tasks (whether in marketing, accounting, etc.), even janitorial services
- Means refer to how an artist becomes a member: nomination, self-nomination, artistic and other qualifications, and the adjudication process
- Terms refer to the length of membership and renewal requirements
- Removal refers to the method for removing members by the governing organization
- Voluntary Departure specifies the required terms under which a member may leave
3) There should be at least three types of membership: Equity Members, Associate Members and Patron Members. Each makes a contribution to the operations of the cooperative. A commission fee for works sold also contributes to the operational costs.
4) The cooperative’s bylaws also must detail the distribution of financial proceeds. As mentioned earlier, most cooperatives charge a commission fee for all works commissioned and/or sold through its services. Most cooperatives credit the equity member’s account for sales, and this account is then used for monthly fees paid to the cooperative or withdrawn by the artist for personal use.
At the end of the year and after a financial analysis, all unused funds (unless the board has established a Reserve Account) are distributed equally among the equity members, if the cooperative is established as a nonprofit.
5) The other details to be presented in the bylaws are governance meetings (quantity, times, notification), duties and election of board members, duties and election of officers, definition and appointment to standing committees, and various administrative decisions, such as insurance, indemnification, fiscal year of operations, fiscal review responsibilities, and procedures for handling amendments to the bylaws.
Remember, regardless of the structure chosen, if the artists’ decision is to create a legal entity for their cooperative, all of the elements above must be discussed by the start-up equity members upon advice of professionals.
Again, there should be at least three types of membership.
- Equity Members. Artists meeting qualifications for exhibiting/performing and who have a “stake” in the cooperative (owner/worker with a voice in the organization’s operations, exhibits, and new members), and which usually include financial contributions. Equity members usually work in the space a set number of hours/month, eliminating the cost of hired staff. Qualifications for equity membership may include: artistic excellence as approved through a juried process, start-up or equity payment, and interview to assess intent to work cooperatively with other equity members.
- Associate Members. Artists who have not met the qualifications for equity membership (artistic excellence or equity payment) but who pay an annual fee for the cooperative’s other benefits. They are not afforded the privilege of exhibit or performance space, but only the use of studio space, equipment, library, etc.
- Patron Members. Those who believe in the cooperative’s mission and make an annual donation at a specified level. They receive special invitations to the cooperative’s events; some may be asked to serve on the governing board.
Other Members also make a financial contribution.
- Emerging Artists. This serves as a training ground for future, potential members who are usually identified through a competition; the winners are provided with an exhibit and/or group exhibit invitation
- Guest Artists. Accomplished artists from outside the geographical limits of equity membership might be invited to produce an exhibition or performance
- Other Donors. This group receives the newsletter and notices of exhibits for smaller-sized donations