Official nonprofit status - an IRS designation as a 501(c)(3) corporation - could give the Senator a significant financial boost by allowing it to avoid paying income taxes and allowing it to collect tax-deductible contributions from the public. But to get the charitable designation, the Senator would have to prove that it serves a purpose other than being historic and that it doesn't look too much like a for-profit company, Bailey said. It would have to offer other programming, such as concerts, plays, art exhibits, school events and even space rentals.
For example, the Creative Alliance has thrived in the Patterson Theater building by converting it into a community arts center.
"That could absolutely be to the community's benefit," Bailey said. "They could suggest uses they'd like to see."
The charitable designation starts with the state's approving formation of a nonprofit corporation. It then would apply to the IRS for the status, a process that could take six to nine months unless it is expedited because of financial hardship or for another reason. The IRS requires a plan that shows what it would offer and where revenue would come from.
The Senator would be run by a board, including people representing the city, neighborhood and corporate community. Bailey said it is appropriate for former owners to serve on the board, but they, and other board members, should not be paid. The board would hire a professional chief executive who is familiar with fundraising and other aspects of running a nonprofit.
City Councilman Bill Henry, who worked with Frank on the city's proposal, said he would like Kiefaber to continue to give input after the theater becomes a nonprofit.
"I'd kind of like to give Tom his life back," Henry said. "I'd like his connection to the Senator in the long run to be a matter of choice and not a matter of obligation."
Kiefaber's home in Sparks, which has been mortgaged as part of previous loans, would no longer serve as collateral.
There are about 5,000 theaters around the nation, including more than 1,400 for-profit, single-screen theaters similar to the Senator, according to Hoovers Online and the National Association of Theatre Owners. But more old theaters, particularly in urban areas, have been going nonprofit in the past 15 to 20 years, said Ross Melnick, co-founder of Cinema Treasures, which works to help preserve historic theaters. But he agrees that it may not be the panacea Senator supporters are looking for because the new nonprofit will still need financial patrons.
