Updated by Max Dana
ArtsPool is unique. You probably have some questions. Here are some that are frequently asked by prospective members. If you have additional questions, or would like to talk further about membership, please contact us through this inquiry form.
What is an LLC?
LLC stands for “limited liability company”. An LLC is owned by its members, instead of stockholders. ArtsPool will operate like a cooperative organization of its members.
What does it mean to become a member of an LLC?
Being a member of an LLC is similar to being a partner of a partnership. Your rights as a member are governed by the LLC’s Operating Agreement. The members of an LLC are not liable for the obligations of the LLC.
Why is ArtsPool not a nonprofit 501(c)(3) corporation?
Given the nature of ArtsPool’s operations as a service company providing services “at cost” and not for free, ArtsPool would not qualify as a 501(c)(3). An LLC offers a more flexible governance structure than a nonprofit corporation. Notwithstanding that ArtsPool is an LLC, it will operate functionally as a nonprofit because:
- its members will not derive any personal benefit,
- its purpose will always be limited to supporting the arts community,
- the compensation of its management and employees will comply with IRS rules applicable to a 501(c)(3), and
- ArtsPool will comply with New York state rules applicable to nonprofit corporations (i.e., conflict of interest policies, etc).
Do I have to contribute any money to become a member of ArtsPool?
No. ArtsPool’s operations are funded through grants and income from the services provided by ArtsPool Services, Inc.
Who is ArtsPool Services, Inc.?
ArtsPool Services, Inc. is a subsidiary of ArtsPool LLC. For legal reasons, the operations and employees of ArtsPool LLC will be conducted through ArtsPool Services, Inc.
Does becoming a member of ArtsPool LLC have any tax consequences to me?
No. ArtsPool LLC has elected to be taxed as a corporation. As a result, any income or losses of ArtsPool LLC will not pass on to its members. Being a member of ArtsPool LLC will also not jeopardize your nonprofit or 501(c)(3) status, if applicable.
What are membership units? What rights do they represent?
Membership units are similar to stock in a corporation. They represent your interest as a member of ArtsPool LLC. Under the LLC Operating Agreement, the membership units you will receive have no economic value. They represent only the right to vote for members of the Governance Committees of ArtsPool LLC.
How many membership units will I get?
Generally speaking, most members will only receive one unit so that all members will have the same number of votes as other members in the same class of members.
Why are there different classes of membership units?
There will be 4 classes of members. Each class will be entitled to elect one or more representatives to ArtsPool’s Governance Committees. The 4 classes of members initially are:
- Class A – members who purchase a package of services from ArtsPool
- Class B – members who purchase only a limited number of services from ArtsPool
- Class C – the management (staff) of ArtsPool
- Class D – limited to Alliance Resident Theatres/New York during the time it acts as the fiscal sponsor of ArtsPool
The membership criteria for Class A and Class B members will be determined by the Membership Committee.
What are the Governance Committees of ArtsPool?
The initial Governance Committees of ArtsPool include:
What are my voting rights as a member?
Each Governance Committee (other than the Steering Committee) will have five members. The Class D member will be able to elect one person to each Governance Committee. The Class C members will be able to elect two persons to each Governance Committee. The Class A members will be able to elect two persons to each Governance Committee.
The Steering Committee will have six members comprised of two members of each other Governance Committee selected by the members of that Committee.
What happens if ArtsPool LLC makes a profit?
ArtsPool will strive to operate on a “break even” basis, but realistically that cannot occur with precision. Profits, if any, will either be invested in the business of ArtsPool or used to reduce the service fees charged by ArtsPool in future years. Profits will not be distributed to ArtsPool’s Members.
What happens if ArtsPool LLC takes a loss?
If ArtsPool loses money in any year, it will be funded either out of ArtsPool’s grants, ArtsPool’s reserves or higher fees in future years. No member will be responsible for losses of ArtsPool. Management (staff) of ArtsPool must submit an annual budget to the Finance Committee for approval and operate ArtsPool consistent with that budget.
What happens if ArtsPool LLC is unsuccessful?
If ArtsPool is unsuccessful in its mission, the Steering Committee may vote to wind down its affairs. In that case, any excess funds or property of ArtsPool will be returned to its fiscal sponsor and/or donors. The members will not receive any distribution upon the liquidation of ArtsPool.
Can I transfer my membership interest?
Can I withdraw as a member of ArtsPool?
Yes. You can withdraw on 60 days’ notice. Your membership interest in ArtsPool will automatically be canceled upon termination of your relationship with ArtsPool without payment of any consideration.
What if there is a legal dispute with a member?
The Steering Committee will have exclusive authority to resolve disputes under the LLC Operating Agreement. The Membership Committee will have exclusive authority to resolve disputes under the Terms of Service.
What is the term of the member's contract with ArtsPool?
Your relationship with ArtsPool may be terminated at any time, with 60 days notice.
How will I be billed for the service fee?
You will receive a monthly invoice from ArtsPool for payment. The amount of your service fee is 4% of your operating expense budget, calculated on a monthly basis, adjusted for YTD actuals. You can also read more detail on this calculation.
Will the service rates increase?
The Finance and Steering Committees of ArtsPool will evaluate the service fees annually. If they are too high, they will be lowered in future years. If they are too low, they will increase in future years so ArtsPool operates on a "break even" basis. As ArtsPool expands its operations and attracts additional members, it should be able to achieve certain “economies of scale” that will be passed on to its members.
What happens if ArtsPool makes a mistake in delivering services?
ArtsPool may elect to either correct the mistake or refund the portion of the fee for the defective service. If the mistake gives rise to a material breach of our Terms of Service, you may terminate your relationship with ArtsPool upon 60 days’ notice.
Is ArtsPool insured?
Yes. In addition to statutory Workers' Compensation and Disability coverage, ArtsPool carries General Liability, Employment Practices Liability, Cyber Liability, and Errors and Omissions Liability insurances in amounts approved by the Operations and Finance Committees.
What happens if ArtsPool's technology crashes?
ArtsPool has chosen technology providers that are compliant with the American Institute of Certified Public Accountants' SOC 2 accounting standard for service companies with regard to data security, integrity, and availability. Whenever possible, we select providers which have undergone an audit to produce a SOC 2 report to ensure that their software and data centers adhere to this standard. This does not mean that these systems can't have outages, but it gives us assurances that any disruption of services will be mitigated by redundancy and failover processes. When selecting these providers we also look for specific security features, such as whether data is encrypted in transit and at rest, the availability of 2-factor authentication, permission-based access, and notifications of unusual activity. As a final layer of protection, we also carry cyber insurance policies relating to our technology.
How do I access my data/documents that ArtsPool is managing?
ArtsPool works entirely in the cloud, so you can access your data from anywhere that you have an internet connection. ArtsPool’s primary contact at your organization will receive top-level access to your materials in Google Drive, the Xero accounting system, ArtsPool’s member-facing web application, and any other systems through which we are managing your data. Additional employees or consultants at your organization will be granted access to specific areas as necessary when specifically requested by you.