It was a typical beautiful, sunny Sunday afternoon in March when I was driving down Sunset Boulevard to partake in some traditionally American unhealthy behavior—In-N-Out Burger. I was craving “animal style” French fries with the obligatory cheese and onions. Traffic is always awful in Los Angeles, but it was extraordinarily bad that afternoon, and all the bars and restaurants were packed with people. Football season was over. The Lakers weren’t playing. What had this city in a complete frenzy? If you’re a film fanatic, then of course you know that it was awards season, and the Academy Awards, aka “The Oscars,” were taking place later that afternoon at the Dolby Theatre.
Admittedly, I love the Oscars, and I’m obsessed with movies overall. One of my favorite movies is Alfonso Cuarón’s Children of Men. In 2006 it received three Academy Award nominations. (I highly recommend it.) Overall, the Academy does a good job identifying and honoring the best in film each year.
This glitzy, glamorous affair is organized by the Academy of Motion Picture Arts and Sciences (the Academy), an honorary professional organization that “recognizes and upholds excellence in the motion picture arts and sciences.” Currently, the Academy has more than 8,000 members. Even though their roster seems larger, membership into the Academy is strictly invitation only. If you’re one of the lucky ones, an invitation to join will come from the Academy’s Board of Governors—34 people who perform their duties on a voluntary basis. By now you’re probably beginning to understand that an organization with an honorary invitation-only membership and a volunteer leadership structure is not your typical business. In fact, the Academy has been a well-established, federally recognized, tax exempt 501(c)(6) nonprofit organization since 1930.
The Academy is part of a long list of American institutions that appear to be for-profit but are actually nonprofit organizations. That list includes the National Football League (NFL), the National Hockey League (NHL), and the Professional Golfers Association (PGA). Specifically, Section 501(c)(6) of the Internal Revenue Code provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues.
Only in America.
Also, any young lawyer with savvy research skills will know that nonprofit organizations in this country must publicly file their taxes annually with the federal government via a Form 990, officially known as the Return of Organization Exempt from Income Tax. This tax filing essentially gives nonprofit organizations an opportunity to report their accomplishments, operations, and finances. The form also provides these organizations an opportunity to demonstrate their case for keeping tax-exempt status.
Thankfully, these forms are public record. Take a quick look at the Academy’s 2016 filings. It’s definitely an interesting read—especially the finances.
This article appeared in the February 2019 edition of the Young Lawyer Magazine
https://www.americanbar.org/groups/young_lawyers/publications/tyl/topics/poplaw/an-evening-the-oscars/
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