Thoughts on fundraising and the other boring parts of building a nonprofit

I started writing this for my personal blog. The one that no one reads or knows about, where it feels safe. Maggie talked me into putting it here instead. Which is less safe, but since this is really about what it feels to try to keep CASH Music standing…well…here goes:

When we talk about CASH Music we talk a lot about what we’re trying to do, and less about the day to day of what we do and who we are. I guess in a lot of ways it’s nicer to write phrases like “sustainability for musicians” than “here’s why this is really hard.”

A little background for the uninitiated: CASH Music is a small nonprofit in Portland, OR. We work with musicians to find career sustainability through education and free, open-source tools to help things like selling, promoting, and distributing music. Open-source means we build all of our code in the public eye, and we shape it by building real projects for working musicians — we believe strongly that musicians and artists need technology they can own and rely on without cuts taken out, new fees, or new closed networks built on their backs.

But there I go talking mission over details again.

I mean it when I say we’re a small nonprofit. We’re two people. Maggie Vail and I are the only full-time staff, with Tracy Soo-Ming helping on a very part-time basis. We have an amazing board, occasional volunteer help, a growing membership of hundreds of musicians, plus a few thousand beta testers.

For all those people, the day-to-day stuff all comes down to Maggie and myself. We’ve learned to compartmentalize and embrace a fragmented and occasionally jagged line forward. In the last year we’ve managed to launch the beta of our hosted service, add new platform features like mass mailing and multiple currencies, redesign the admin app, build membership and community, and put on the first of what will hopefully be many in-person summits anchoring our evolving educational efforts.

Those are the public-facing things. To get them done we need to navigate the administrative pitfalls of a growing nonprofit. There are everyday things like tech support, bug fixes, planning and messaging, etc. We were denied our 501(c)(3) application. Rather than walk away we chose to get ready to apply again, which involved moving the nonprofit itself from Rhode Island to Oregon, reworking mission and organizational structures, and sorting our now-changed tax status and responsibilities for the past five years.

All that stuff is fine. The thing that really wears on us is fundraising.

Money and I have never really gotten along. It’s not that we don’t like each other — I feel an appreciation for the things it can do and it’s an inanimate object so I doubt it feels much at all for me. But there’s something about fundraising for a young nonprofit that absolutely crushes your soul and makes you wonder if you can go on. In one part, it’s the fact that in our world we’re often six to eight weeks away from our final paychecks — needing to figure out next steps or walk away. That weight takes a toll.

But I think it’s actually something in the scale versus the pace of the organization that really makes me lose sleep. The first few years no one got paid. I lived off side jobs and built it up with all the rest of my time. Kristin and others we worked with would kick in and keep servers on. It was terrible, but when things are terrible and small it’s easy to maintain. “How are things?” “Terrible.” “Oh right. Well then, carry on!”

As CASH has grown so have our administrative efforts and the need for fundraising. It was around two years ago that this dream job became a full-time job, and even with modest salaries there’s an ever-present shadow of new fundraising efforts over everything we do.

(Disclosure: my take-home pay every month is around $3800. People ask, and I assume others wonder. Both Maggie and I have turned down offers for a lot more but it’s hard to walk away from a dream job. also we don’t own CASH Music. Nonprofits basically own themselves, so we’re employees. There’s no “yay we got acquired” or other startup-style payday in our future. We like it that way.)

The part about no one owning CASH is significant to this particular narrative. With no ownership, no one can invest in or buy a stake in the organization. So in fundraising we can’t raise investment, we can’t offer a tax write-off, many grants are closed to us, and we have to stick closely to 501(c)(3) rules in order to re-apply. We need to find people who genuinely care about our mission of artist sustainability and figure out ways to bring them value.

Our first real break came a couple years back when MailChimp sponsored our efforts to integrate with their service. They did so in a way that allowed us to move forward, with no strings attached and no exclusivity. We could model the platform as planned, allowing other services to integrate on even footing. That relationship has grown to include their Mandrill mass mailing product, and they’ve graciously sponsored our platform and summit events. That set a precedent and we’ve since gotten similar no-strings support from Mozilla and Google — furthering open development and outreach to artists as well as sponsorship of the platform and summits.

We’re working on other sponsorship-style fundraising efforts, but they’re generally long engagements and they take a lot of work. So we’ll be doing a public fundraiser before the year is out, maybe another Kickstarter, and we’re working on offering some kind of voluntary membership program. (We won’t ever gate off functionality in the platform, even hosted, so it’ll be something modest with a bundle of value-add offerings like a AAA membership for working musicians.) Basically there’s a plan and we’re piecing it all together slowly.

I’m writing all this for a couple reasons. First to get it out of my head. You can imagine the obsessive buildup as you work your dream job, trying to bring a long-term change that’s needed, knowing that it could end any moment. I’ve been across the country visiting family this week, working slowly towards new element structures in the platform. The work is sorely needed, and all the while there’s been summit planning and fundraising forcing their way into my head — in between bringing our girls to meet new cousins or see the ocean that used to be our back yard.

The other reason I’m writing is to open up our process. Some folks ask why certain features aren’t ready, or why our roadmap moves around so much. The answer is triage. We’re constantly finding the most important thing and addressing it. One day it’s a summit, the next it’s bug fixes or UI changes, the next features, but all too often it’s fundraising.

I realize that CASH, as an organization, is in the midst of growing pains. We’re closer than ever to lifting the “beta” tag from the hosted version of the platform and updating installers for a huge leap forward of the downloaded version. When we can we’ll hire a fundraiser, I’ll play more of a management role, and we’ll push forward on education with Maggie helming the summits and our online curriculum. It’s exciting, and there are changes on the horizon, but for now I just want to get the platform polished and out of beta. So if you’re sitting on an end-of year marketing budget and want to do some good in the world please reach out. I’m always available, my number is (401) 864-2118, and I’ll talk about any idea that pushes fundraising and administration out of my head in favor of building.

So there’s my long catharsis about fundraising and growing a nonprofit from the ground up. It was helpful to type even if it’s a bit of a boring read. I hope it shed some light on things for anyone who might be interested. Next week we do our second summit date and immediately following we’ll have more code sprints, more announcements, and more features rolling out.

Now I’m hopping on a plane back home to Portland with a clear head, ready to raise less corn and more hell. There are exciting times ahead.


Attention US artists: important health insurance survey

Artists: do you have health insurance? If not, why not? Nonprofit artist groups, FMC, AHIRC, and Fractured Atlas, are conducting an online survey from July 17 – Aug 31 to assess how many US-based artists have health insurance on the eve of the Affordable Care Act.

Click here to participate in this survey: http://www.research.net/s/artistsandhealthinsurance

Your answers are anonymous and confidential, and the survey should take about 10 minutes to complete. We urge you to participate so we can really understand the health insurance needs and priorities of the artist community.


August 1st Summit

We are delighted to say the first CASH Music Summit day on August 1st was a success! We are writing up our report right now and will be posting it later this week.

As we mentioned before, the format of these events is a total experiment and we knew it would only be as good as the folks who showed up to take part. We were floored by the amazing people that came and all of the general positivity in the room. Much is made about the frustration surrounding the intersection of music and tech so it was inspiring to be reminded of the excitement and possibility around it too.

Thank you to our amazing speakers: Jean Cook, Rebecca Gates, Maura Johnston, and Selena Deckelmann.

Thank you to the sponsors that made it all possible: Mozilla, MailChimp, Google, Car2Go, Marmoset Music, Wemo Lab, Deschutes Beer, Sizzle Pie, and Pickathon.

Stay tuned for more online.


Healthier streams: Nigel Godrich, Thom Yorke, and Spotify

Over the weekend Thom Yorke and Nigel Godrich (of Atoms For Peace) each wrote a series of tweets about pulling their music from Spotify. You should read them all. Their main reason wasn’t their own financial well-being, but that of younger artists trying to find a place as working musicians. They argue that the current system rewards larger acts and corporate shareholders, but doesn’t pay emerging acts.

They’re not wrong.

Slings and arrows came out on both sides of what is becoming a pretty tired argument. There are absolutists on each side. Streaming is terrible or streaming is the future. It’s time we start looking for the path forward that works for all of us, and stop arguing from standpoints that leave no room for movement.

Godrich and Yorke not only have the right to pull out from these services, they’re also right that streaming hurts emerging musicians. That argument is weakly countered with arguments about exposure, total pay-outs by streaming companies, or the idea that there’s no better rate to be found, so fuck it, we’re tossing our hands up and giving up.

There’s the good argument that musicians’ income doesn’t hinge on sales anymore. And that’s true, except when it’s not. For many musicians outside the mainstream or in the earlier stages of their careers, selling matters. Music and merch sales mean everything when your life is lived in a cramped van or when you’re trying to convince someone your work is worthy of their time. The bottom line is that sales matter, and in a stream-only world there’s nothing to help get new artists off the ground.

I’d argue that exposure and discovery aren’t worth a thing if you’re not driving the attention back to a place where the artist can take advantage of it. My hope is that services like Spotify begin to look at artists as partners, realizing the long-term health of each is now tied together. With no new music, Spotify dies. With no mass audience, we set an all-too-low ceiling for working musicians.

People like to say the rate is as good as it’s going to get. That may be true, but it doesn’t mean we should stop looking for other ideas. In an ideal scenario, Spotify et al would give artists the ability to add and control buy buttons, letting them sell records and merch directly from within the system. Control is an important part. The artist needs to be able to control where those buttons lead, driving traffic to the thing that saves their lives — be it vinyl, shirts, tickets, or even just simple email signups.

This should be controlled at the service level, not through a central clearinghouse. Introducing another gate at which 15-20% can be levied against the artist in transaction isn’t the answer. Limiting access to customers of one direct sales or ticketing platform isn’t the answer. Working with musicians to create a controlled environment where the most dedicated fans can directly support them — in the way the artist sees fit — is the most healthy thing that can be done. Suddenly all the arguments about discovery and exposure carry weight, and you’ve created an ecosystem where real growth can happen.

And if you think Godrich and Yorke pulling their music was a statement, imagine how much more impact it would have if they were returning to Spotify because their issues were addressed.


New admin interface

This weekend we pushed a pretty major update to the hosted beta. We’ve been listening to feedback and with that in mind reworked the user interface from the ground up.

In addition to the new look and feel (more dogs!) you’ll find a reorganized workflow with your elements front and center on the main page. It’s a work in progress, but we’re making the main page the center of the experience, with elements, publishing, embeds, and an activity feed right there.

The main navigation is now anchored to the top of the page, and you’ll find icons throughout the interface as visual clues. Confirmation and error messages more obvious, and there are other small tweaks.

This is just the start. We’ve set the foundation for a bunch of enhancements that we’ll be rolling out alongside new features. More soon!

Log in or sign up now to check it out.


The problem with the IRS and open source: logic, not discrimination

The New York Times just ran a piece on the BOLO (be on the lookout) practices of the IRS. They’re at the heart of a story where some groups are saying they were unfairly targeted by the IRS. CASH Music and the role of open source software were both mentioned in the NYT piece, and as we’ve long suspected (known) the IRS has indeed been flagging all tax exempt applications from groups mentioning open source software.

That the IRS is placing close scrutiny on certain applications makes perfect sense. In the case of open source nonprofits they argue that many applications are actually attempts by for-profit entities to gain tax advantages by creating token open source software to lower their tax burden. If that were actually the criteria by which they were judging applications the story would end there and we’d all be better for it. Unfortunately it appears that there is an argument inside the IRS that all open source software grants competitive advantage to for-profit businesses and that argument is being used to deny applications across the board.

This is unfortunate, and we cannot stand for it — open source in the nonprofit space is a vital piece of a healthy open web. If the IRS wholesale blocks that piece of the open web we will face new challenges that CASH Music has been quietly dealing with head-on for some time.

We applied for nonprofit status in February of 2009. We were formally rejected in June of 2012. I handled the initial application myself, which as anyone will tell you, is dumb. But we had no money for help, so it was the only option. (I made mistakes in the application, which were pointed out in the process, but they did not lead directly to our rejection.) Our review was handled by a very nice agent named Peter. It involved several amicable back-and-forth phone calls clarifying what we’re trying to do, followed by a five page questionnaire in January of 2010.

The questions asked us to project three years of revenue, what activities are underway, what sort of educational goals we have, what data we could contribute to the public benefit, and specifics about the licenses of the software we had built and are building. A lot of work, but reasonable enough.

After our answers were submitted I’d call and ask how things were going. The answer was always “we’re busy, but I’m sure it’ll be soon.” Then almost a full two and a half years later we got a 14 page rejection letter signed by Lois Lerner, not the agent I had spoken to so many times.

There were things in the rejection we could have argued, but the heart of their argument was simply that open source creates competitive advantage for individual companies by allowing them to not pay for software where others may have chosen a commercial option. So free software, available to all, creates competitive advantage and therefore creating with and distributing it for free for the benefit of all is not an exempt activity in the eyes of the IRS.

In their words:

"[Your] audience derives a commercial advantage from your open source programs because, in its absence, the musician or company would either need to develop their own software or would have to purchase commercial software. Thus, by providing open source software, you reduce or eliminate production costs and provide musicians and music companies with a distinct commercial advantage."

This is a scary and dangerous argument that all open-source advocates should fear.

After all the scrutiny the IRS clearly determined that we were not affiliated with any for-profit entities or efforts. With revenue projections and detailed questions they determined that we were not trying to directly benefit from the work on an individual financial basis. They rejected our application because we want to build free software to help musicians and that would take advantage away from commercial options.

We continue on today as a nonprofit organization in the state of Oregon but without federal tax exempt status. This means we’re barred from raising money via traditional investment, but we are also unable to offer tax refunds and unable to apply for many sources of traditional nonprofit funding.

I’m raising this issue not for us, but for other groups in similar situations.

We will continue to offer free software for musicians. It will always be free. We will always be a nonprofit organization. We are building up and rolling out our educational efforts. They will always be free. By denying our application for federal 501(c)(3) status the IRS has significantly slowed us down but it will not stop us from our mission of artist sustainability. We are finding other ways forward and have had help from our lawyers figuring out the best avenue to federal status — we do plan on reapplying because we believe that building free software to allow direct participation by all in the open web is a vital role for nonprofits to play.

In the meantime fundraising is a constant and time consuming challenge.

If you believe in what we’re doing and want to help you can donate to CASH Music or help contribute to the software.


This blog is published under a Creative Commons BY license — you are free to copy and repost text and images unless otherwise noted.

Our Mission.

CASH Music is a nonprofit organization focused on educating and empowering artists and their fans to foster a viable and sustainable future for music. We believe the best way to ensure a sustainable future for music is to invest in its creators. Learn more.

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