No Pay Benefits Shows

[bluewine]

I guess I'm odd, because I actually enjoy doing benefit shows. I definitely do the ones I'm passionate about, but even the ones that aren't on my "personal favorite charity list" are fulfilling to play. Sure, I won't pass up high paying gigs for them (unless it's for something like MDA or a musicians medical bills), but in the end, what's $20 and a few hours out of your time in comparison to the satisfaction of helping others ?

Just my opinion.

I would rather give 50.00 to the charity. Playing for free when it was a 2 he drive an 11:00Am slot, pay for your food.

No thanks.

 

[Stumbo]

My fee waiver is a direct donation. They don't have to pay squat. That is a direct benefit to the charity of $500 in this case. If I draw another 50, they just got $500 they would not otherwise have realized. So, my donation of time plus my draw is a direct benefit to them of $1000. Yes, in pure cash its only $500, but in direct benefit its double that.

Unfortunately, since the $500 paid by audience came out of their pocket, you can't deduct it on your tax return. They can each deduct their individual $10 donation on their own return.

There is no accounting method that exists to record other people's expenses/donations on your books.

If you've been doing that on your taxes, I suggest see a CPA and file amended returns. If you get audited, you have no receipts for the audience donation. No money/time was contributed by you for that. Explaining your situation to the IRS in the manner you've done here will get you laughed at and a nice tax bill.

If you still disagree, show me in the IRS code where it approves what you're doing. Actually you don't have to. It's not there.

Good luck.

 

[fingerbun]

I'm not talking about profit, I'm talking about total contribution/donation.

The charity hopes I draw, but no one actually pays me "to draw." You get paid to play, period, with the expectation that you are good enough people will want to come see you play and they will spend their dollars.

I don't know any club owner who says, "I'm not paying you to play, just for your draw. So, I'll put you on the bill and you don't have to play."

Charities book you to play, and yes, based on your popularity as part of it. Most charities hope you bring people with you, but most, I have found, are looking for entertainment for the event. The cancer society can have many fund raisers that don't include any entertainment. Most of those bomb. Its funny how so many people, including TBers, will say they support a cause but if all they had were 1 hour meetings monthly and you had to pay $5 at each meeting, none of them would go. But have a silent auction, dinner dance, cruise or vegas night? People come.

I am showing the youngun's here how you have to approach the finances and the thought process for benefits and charities and why asking for your expenses is justified.

My fee waiver is a direct donation. They don't have to pay squat. That is a direct benefit to the charity of $500 in this case. If I draw another 50, they just got $500 they would not otherwise have realized. So, my donation of time plus my draw is a direct benefit to them of $1000. Yes, in pure cash its only $500, but in direct benefit its double that.

My point again is that in these situations if you treat them as pure cash transactions you can't really assess them. For example, what is your time to advertise this gig worth? Do you have to pay for the website maintenance? Did you eat up text message limits? Did you spend any time marketing yourself at that event? That costs, in most cases time, but your time is worth something. So to add up the true "cost" you have to add up not just your performance donation but the time you spent with it. Ever hear of the economic term "cost-benefit analysis?"

I used to do this all the time when Phil Crosby's "Quality if Free" was all the rage. The "cost of quality" was not just the cost of the material you threw away, but all the labor it took to make, inspect, sort, quarantine and discard the item, or all the "value added prospects of it." Then, when you wanted to calculate how much "zero defects" type quality systems saved you added up not only the actual cost of the materials you would normally would have thrown away, but also the labor and overhead associated with that item in its form. Hence how they got "quality is free".

Anyway, enough economic and industrial arguing.

Just the way I do business when it comes to benefit and charity events, and I find it makes it much easier to figure out what to do and to show the charity how paying your expenses is still okay.

Interesting approach. Love to see a band achieve six sigma.

But I do like your bass playing, that's the main thing!

 

[TRichardsbass]

Unfortunately, since the $500 paid by audience came out of their pocket, you can't deduct it on your tax return. They can each deduct their individual $10 donation on their own return.

There is no accounting method that exists to record other people's expenses/donations on your books.

If you've been doing that on your taxes, I suggest see a CPA and file amended returns. If you get audited, you have no receipts for the audience donation. No money/time was contributed by you for that. Explaining your situation to the IRS in the manner you've done here will get you laughed at and a nice tax bill.

If you still disagree, show me in the IRS code where it approves what you're doing. Actually you don't have to. It's not there.

Good luck.

I don't deduct the audience portion, obviously.

People tend to forget when they are approached for a benefit that you have to look at all angles. I'm not talking about a benefit for someone close or for a cause you would die for. I'm talking about the million other calls you get to do bennies.

Like I said in my earlier post, last year I got hammered with requests, many from groups that just did a search of similar charities and they contacted all the same groups that were part of those shows.

So I look at my benefit performance requests with the approach I put forth. It really helps you think through saying yes or no.

I use a similar approach when a bar or club I don't know contacts me for a show. If they are calling me, then they want my draw. So I look at all that goes into it before I set my price.

Example: There was a small restaurant in South Jersey that the owner wanted to see if he could build a clientele for the bar from 10-closing. He had never done that before but obviously the margin on liquor is better then the margin on food.

So through a friend they contacted me. He asked if I'd do a weekly for the first month on a Tuesday for a piece of the bar. So I sat down and looked at it. My cost in gas, tolls and food about $40 per gig. Same for the other two in the group, so $120 in expenses to begin. We don't drink all that much, so getting band prices of $1 per drink doesn't really matter. He did offer a meal (read that to mean burger or sandwich.)

Our draw of regulars on that day in that location would probably be about 20 people max to start. No cover. It was a drive for most, so they wouldn't be pounding it like when we are local. Figure three beers each at $4 a beer, so the bar would take in about $240 gross, so figure $120 net at best.

Add to that the time it takes to advertise the new location, add the dates to the facebook, myspace, yada yada, email the Richards' nation and I'm putting in at least another 6-8 hours. On paper I'm losing too much to do this gig, even if I can build a following in a remote restaurant on a normally dead night. So my answer was no. Had it been a once a month, I might have done it to see what it was like, but as a regular gig I'm not even breaking even. Since he obviously couldn't or wouldn't offer a set fee, then he isn't ready for this really full time.

That's how I do it. I never take into account on my legal taxes what the audience pays to get in, but when I am talking to a charity I always factor that in, because the people I bring to the charity are paying the cover/donation and therefore it is part of MY contribution to the charity. If I didn't play those people wouldn't come.

By the way, as an original artist I've played a lot of money losing shows. The difference is, if you are LLC or incorporated, you can deduct much of the cost of those shows so you still get a benefit in the end. And when considering a non-benefit show the exposure means more because its not about a cause, its about the bar and who is on the bill.

 

[TRichardsbass]

Interesting approach. Love to see a band achieve six sigma.

But I do like your bass playing, that's the main thing!

Yeah, I apply all kinds of thinking to this, since it IS a business. I'm not huge on six sigma, but I do agree that waste is what kills you with music. Cost of rehearsal space, driving to and from, maintaining your equipment and the like all add up quickly. So, putting some industrial thought to the music biz doesn'r hurt.

One of the things I teach all the bands I mentor is the cost of an actual show. I add it up in hours. Choosing a set list. Rehearsing for the show. Driving to and from rehearsal. Maintenance on instruments and amps. Driving to and from the show. Load in time. Sound check time. Actual performance, load out, and the obligatory "band can't leave until the end of the night" time. Really puts it in perspective for these kids.

For a 45 minute set an original band can put in easily three hours of rehearsal, another 4 hours of driving to and from, a couple of hours for band report and load in/sound check, then an hour waiting, an hour playing and breaking down, 30 minutes to load out then another hour to drive home. So lets put it at 12 hours invested.

After the set the band at the end of the night is handed their piece of the door, which for many is usually about $80 to $100 max. Divide that by the normal band size of 4, and you get $25 per person max. Then divide that by 12. You just earned gross $2/hr. Take out, in theory, taxes and your other expenses, and maybe you got $1 per hour.

So, using that LEAN approach and minimizing waste is important. Also makes for better decisions. Converting a space into a rehearsal room = $$$$ in your pocket. Being on time for rehearsal and not f'ng around - $$$$ in your pocket. Keeping things as local as possible = $$$$ in your pocket. Cleaning your bass and amp after every gig and not putting the volume on 11 = $$$$$ in your pocket.

Most of the kids don't even understand those concepts. They bang the living crap out of their instruments, whack 'em up, and don't think about how down the road it will cost them four times as much to replace that or that at some point it will cost them way too much in repairs.

I teach all the bands I have managed how to change oil and do simple maintenance like brakes on their tour vans and remind them to check all the fluids every morning before going anywhere. Also, I tell them to at least rinse the van off as often as possible when on the road because, like UPS found out, you can save tons of money on gas that way.

Not quite sure how you would create a Shewhart chart for a set list though.....

 

[fingerbun]

Yeah, I apply all kinds of thinking to this, since it IS a business. I'm not huge on six sigma, but I do agree that waste is what kills you with music. Cost of rehearsal space, driving to and from, maintaining your equipment and the like all add up quickly. So, putting some industrial thought to the music biz doesn'r hurt.

One of the things I teach all the bands I mentor is the cost of an actual show. I add it up in hours. Choosing a set list. Rehearsing for the show. Driving to and from rehearsal. Maintenance on instruments and amps. Driving to and from the show. Load in time. Sound check time. Actual performance, load out, and the obligatory "band can't leave until the end of the night" time. Really puts it in perspective for these kids.

For a 45 minute set an original band can put in easily three hours of rehearsal, another 4 hours of driving to and from, a couple of hours for band report and load in/sound check, then an hour waiting, an hour playing and breaking down, 30 minutes to load out then another hour to drive home. So lets put it at 12 hours invested.

After the set the band at the end of the night is handed their piece of the door, which for many is usually about $80 to $100 max. Divide that by the normal band size of 4, and you get $25 per person max. Then divide that by 12. You just earned gross $2/hr. Take out, in theory, taxes and your other expenses, and maybe you got $1 per hour.

So, using that LEAN approach and minimizing waste is important. Also makes for better decisions. Converting a space into a rehearsal room = $$$$ in your pocket. Being on time for rehearsal and not f'ng around - $$$$ in your pocket. Keeping things as local as possible = $$$$ in your pocket. Cleaning your bass and amp after every gig and not putting the volume on 11 = $$$$$ in your pocket.

Most of the kids don't even understand those concepts. They bang the living crap out of their instruments, whack 'em up, and don't think about how down the road it will cost them four times as much to replace that or that at some point it will cost them way too much in repairs.

I teach all the bands I have managed how to change oil and do simple maintenance like brakes on their tour vans and remind them to check all the fluids every morning before going anywhere. Also, I tell them to at least rinse the van off as often as possible when on the road because, like UPS found out, you can save tons of money on gas that way.

Not quite sure how you would create a Shewhart chart for a set list though.....

TOO MUCH!!!! I HANG OUT ON TALKBASS TO GET AWAY FROM THIS WORK CRAP!!!!! ARRGGGHHHH!!!!

Having said that, I agree with the cost analysis you just outlined.

 

[LAPetrarca]

In forty-plus years of playing, I've played a few benefit/charity shows for LOTS of reasons. NEVER have I played for free and had to pay an admission, donate my time and buy my own food and drinks......even if it is only soda. Just not gonna' do it.

Trust me......SOMEBODY along the way is making money......literally at my (or your) expense.

My years of individual practice, band rehearsals, investment in gear, hell, even the gas it costs to get to the gig has a value. The LEAST a promoter could do is provide you with a few burgers and dogs.

 

[TRichardsbass]

TOO MUCH!!!! I HANG OUT ON TALKBASS TO GET AWAY FROM THIS WORK CRAP!!!!! ARRGGGHHHH!!!!

Having said that, I agree with the cost analysis you just outlined.

Meeee tooooo!!!!!!!!!!!!!!!!!!!!!!!!

Love ya!

 

[Stumbo]

My fee waiver is a direct donation.

It may by your personal donation but it's not a tax deductible donation. I've read many times that bands get a "receipt" for their time donation and deduct it on their taxes.

You can't deduct something that you intellectually put a value on. No cash or goods have changed hands.

Per the IRS you cannot deduct:
"The value of income lost while you work as an unpaid volunteer for a qualified organization."

Publication 526 Publication 526 (2010), Charitable Contributions

Good luck on your audit.

I suggest filing amended returns and pay the appropriate taxes due.

 

[bolophonic]

It may by your donation but it's not a tax deductible donation. I've read many times that bands get a "receipt" for their time donation and deduction it on their taxes.

You can't deduct something that you intellectually put a value on. No cash has changed hands.

Per the IRS you cannot deduct:
"The value of income lost while you work as an unpaid volunteer for a qualified organization."

Publication 526 Publication 526 (2010), Charitable Contributions

Good luck on your audit if it's done on a regular basis.

That is basically what I keep thinking as I read this thread.

 

[Stumbo]

That is basically what I keep thinking as I read this thread.

Also, if you keep track of all your actual cash expenses (gas, food, etc) for a non-paid gig, those are not tax deductible as well since the organization putting on the benefit didn't receive any cash from you.

 

[RustyAxe]

Which is why we don't play for free ... you charge your fee, and then write a check to donate all or part (get the receipt!). THAT is an allowable deduction if it's a bonafide 501(c)3 organization ... cash changed hands, even if it was a net wash. Whether or not you report the income (as you should) depends on whether you'll get 1099-Misc and your own ethics ...

 

[fingerbun]

Which is why we don't play for free ... you charge your fee, and then write a check to donate all or part (get the receipt!). THAT is an allowable deduction if it's a bonafide 501(c)3 organization ... cash changed hands, even if it was a net wash. Whether or not you report the income (as you should) depends on whether you'll get 1099-Misc and your own ethics ...

Making the obvious comment that tax laws vary by country and you should seek advice on your specific circumstances. The allowable deductions in Australia would be different from what you guys are talking, though the basic principles are the same.

 

[KevInDaBassment]

Charity is one thing, and often looks wonderful for the band to get involved in something involving charity. If this is just a regular gig, there are so many ways to say no to this lol. I would act insulted and ask if the rest of the people there are doing this for free (vendors, sound guys, security, etc). People will get away with as much as you are willing to put up with. In this situation, I would walk...no, I'd run lol

 

[bolophonic]

Also, if you keep track of all your actual cash expenses (gas, food, etc) for a non-paid gig, those are not tax deductible as well since the organization putting on the benefit didn't receive any cash from you.

If a performer is claiming that their normal fee is $500 to show up and play, wouldn't that fee already take into account the expenses? It hardly seems reasonable to me that you could consider the performance to be a $500 donation if you are then also demanding to have your expenses covered on top of that. It looks to me as though Mr. Richard wants to make sure the expenses don't come out of his pocket, but are also not deducted from the value he is placing on the performance.

And exactly how does one reasonably value a donated performance? By Mr. Richard's estimation, it sounds as though a highly paid executive could consider it a $100,000 donation if they handed out water bottles at a charity race for an afternoon just because they happen to make $25,000 an hour (hypothetically.)

 

[DanAleks]

I would rather give 50.00 to the charity. Playing for free when it was a 2 hr drive an 11:00Am slot, pay for your food.

No thanks.

I did these gigs in my 20's.
Sucked then, sucks more in my 50's!

 

[TRichardsbass]

If a performer is claiming that their normal fee is $500 to show up and play, wouldn't that fee already take into account the expenses? It hardly seems reasonable to me that you could consider the performance to be a $500 donation if you are then also demanding to have your expenses covered on top of that. It looks to me as though Mr. Richard wants to make sure the expenses don't come out of his pocket, but are also not deducted from the value he is placing on the performance.

And exactly how does one reasonably value a donated performance? By Mr. Richard's estimation, it sounds as though a highly paid executive could consider it a $100,000 donation if they handed out water bottles at a charity race for an afternoon just because they happen to make $25,000 an hour (hypothetically.)

First, bands should incorporate or LLC if you are making money. Its amazing how business expenses can offset "gains" in many situations.

By the way, my fee does not directly take into account for my expenses, as that changes with each gig. For most gigs we have a set fee, and expenses do vary. My fee does attempt to make maximum profit, but in most cases I don't charge based solely on expenses.

For my SoCal friend, when you agree to donate your fee you are NOT working for the qualified charity. Therefore, the specific part of the tax code does not directly apply. We are not talking about you volunteering to work the door or sell 50-50s or do any volunteer work for the charity. You are donating your performance fee. There is a significant difference.

If I approached a charity and said I would volunteer for them it changes the equation. In this case they are asking me to waive the fee. I never "waive" the fee. I donate the fee and get the receipt for the value. Either way, I have a killer accountant and have been audited many times in the past decade. Still here, not in jail, never had a problem.

Again, I'm not volunteering my time. I'm donating the fee. Words matter.

Yes, a CEO cannot deduct on his taxes time he spends working for the cancer society. Neither can I. But if I'm asked to play a benefit I agree to donate my fee.

Also, in theory, if I donate my fee but get paid expenses, my donation is only the difference between the two.

That car ride to the venue? You get credit for mileage, you can take depreciation on your vehicle and other things. This is a business, after all.


Anyway, to put this back in perspective, what goes on my 1040 is my business. What I am trying to point out is that if you look at benefits you play as just the actual performance you aren't really looking at it in a smart way.

Again, the charity benefits by:

1. I donate my fee. They don't pay for the entertainment.
2. I advertise the show. They don't pay for the advertising even though they will get draw from it.
3. I draw a specific crowd that pays entrance fees, buys 50-50s, eat the food and drink the soda/beer.

So, if I add it all up I am personally responsible for them receiving well over just my time and fee. Has nothing to do with my taxable income. Is the charity worth me donating my time and fee, advertising the show for them, and then bringing a number of people who through their ticket purchase and food and drink purchases will bring them? What is that worth?

So, if you look at it this way, you can see why asking for your expenses to be paid and getting a burger and fries is acceptable and correct. Your presence and performance there brings the charity revenue and profit.

 

[bolophonic]

This was much clearer. I am still wondering what a receipt like this would look like. Fee-expenses = donation?

Also: in an earlier post, you were very specific to say that your fee is only for your performance and absolutely not based on your draw, but here it sounds like your draw is a very big part of the equation.

 

[Downunderwonder]

Again, I'm not volunteering my time. I'm donating the fee. Words matter.

for sure, understood and agree

Again, the charity benefits by:

1. I donate my fee. They don't pay for the entertainment.
2. I advertise the show. They don't pay for the advertising even though they will get draw from it.
3. I draw a specific crowd that pays entrance fees, buys 50-50s, eat the food and drink the soda/beer.

So, if I add it all up I am personally responsible for them receiving well over just my time and fee. Has nothing to do with my taxable income. Is the charity worth me donating my time and fee, advertising the show for them, and then bringing a number of people who through their ticket purchase and food and drink purchases will bring them? What is that worth?

So, if you look at it this way, you can see why asking for your expenses to be paid and getting a burger and fries is acceptable and correct. Your presence and performance there brings the charity revenue and profit.

Say the sport of hamster racing is becoming popular and you happen to have a flock of racing hamsters in your backyard which you graciously agree to bring along for races to be held while all the bands are shagging about swapping over. You will advertise the racing because you're an avid up and coming hamster racer.

The hamsters don't get paid cash, traditionally at a commercial hamster race meet they would get a special 500 dollar buffet, but being a charity race they have to make do with their everyday tucker when you get them home in your truck which you paid the gas and maintenance on. The charity didn't pay, does that sound familiar?

The hamster race draws a great crowd of beerswilling, hotdog munching hamster fans who paid to get in and may or may not have enjoyed the bands as well.

Is the charity able to book up the 500 bucks they didn't spend by ducking out of the customary hamster feast?

How do they do this? Where in their books does it show a credit? This is the bit I don't understand in your argument. I get that you donate your fee back to them, but your fee has to come off their bottom line before they can credit your donation, you ignore that bit of the equation and keep repeating the same lines.

 

[Depth_Charge]

Of course it comes off the bottom line. But no money changes hands, just some pieces of paper to account for it.

From the band, its an invoice to the charity for the performance listing the fee normally charged, the donated portion (usually the same as the fee for us hobbyists), and the balance owed.

From the charity, its a receipt showing the same.

Its reconciled at tax time, not in cash but in a reduction to the bands or individuals annual income as a donation (so the band pays less tax), and as a tax-deductible expense (which they never actually paid for, so they get a bit extra too) for the charity. I have no idea how its done at the individual level as the guys in my band didn't care when queried.

Touch wood, the taxman hasn't come a knockin' yet