Proposed structure: the Hub
Please click here to view a diagram of the proposed structure.
This proposal is for a top level entity to act as a "hub" of sorts for the Burning Seed community. A subsidiary entity runs the annual Burning Seed event. Other subsidiaries could be created for other ventures and projects; or just committees - depending on the requirements of the project.
This structure provides the following features:
Centralised community input, through voting for a board of directors
Separation of liability for the annual event from the holding entity
Separation of financial structure to help with NFP status
Freedom for the operating entity to register with State Parks, contractors and other entities directly
Freedom for the operating entity to structure itself in a way that best suits the needs of operation
The model has unanswered questions that may be relevant for discussion here, and others that should be instructed by experts. For example the relationship between the Holding and Operating entity; this relationship is key issues such as liability and tax.
Therefore it may be worth splitting into new threads for discussion of:
Control of the Hub entity over the project entities, and specifically the Burning Seed event operational entity
Legal relationship between them (as discussed above)
Financial relationship; does the hub entity sell tickets and "hire" the operating entity to run the event? What are the tax implications of that?
Robin MacphersonWed 22 Jul 2020 8:18AM
I don't think it should look hierarchical, it is too controlling a thought in both directions, prefer an allied autonomous entities working togethor for a common goal when required and not compelled to when not - ??
SamWed 22 Jul 2020 8:22AM
Why would hierarchy stop this happening? REC is at the top of the entire burning seed hierarchy, and in my opinion it's ideal - the org have had near complete freedom to put on the event, but with a safety backstop of leadership
Susanne ParrisFri 17 Jul 2020 9:06AM
It would sort of look like a family tree with a single parent at the top.
Madeline FountainFri 17 Jul 2020 10:20AM
How about if you conceptualise it as a hub and other orgs radiate out from it?
Madeline FountainSat 18 Jul 2020 6:59AM
I think your observation is a really good one @Susanne Parris . It is correct in its interpretation but to me that indicates that we can redraft the diagram to reflect a more holocratic relationship between the entities rather than a hierarchical one. @Sam is going to have a go at that and it won't change the idea but would better reflect what we have been talking about in the Vision sessions (this diagram was floated in one of the first round of talks and a lot has been discussed since). The Cultural entity does not have to be a parent to multiple orgs, but rather a HUB as the name suggests.
Madeline FountainFri 17 Jul 2020 10:24AM
Each related org has its own constitution and a structure that is suitable to its purposes. But the “ownership“ or rather the relationship structure is a major thing to be worked out.
Robin MacphersonWed 22 Jul 2020 8:22AM
Still getting into my Loomio groove - Re the poll, I know I missed it, however if I just felt like I wanted to discuss it more, is that space here?
SamWed 22 Jul 2020 8:28AM
You (and everyone) are most welcome and encouraged to contribute any time that a thread is still able to be accessed. We'll close them when the time has come to finish that workshop
Item removed
Madeline FountainTue 11 Aug 2020 2:06PM
So I think it goes like this:
The members join the cultural org
The cultural org (therefore the members) retains ownership of the Burning Seed IP and the current assets.
The cultural org engage the operational company to produce the event with an agreed budget and fundraising target.
The operational company is licensed to use to the Burning Seed trademarks.
members agree by resolution (at the AGM or a special general meeting) to the fundraising target for the event that year
Ops org provide an estimate for the production of Burning Seed
members agree to the budget for the production
Ops org receives payment
cultural org is the ticket vendor
cultural org funds creative content that can go to Seed e.g. theme camps and artists, through a quarterly grant program: grants could be split into site specific work for Seed as well as for other public art opportunities
operational org responsible for applications for placement of art and camps, but not funding
cultural org to negotiate a group insurance policy for creatives??
Production entity signs all site related contracts & pays invoices
Production entity produces effigy and temple under its budget
production entity responsible for all statutory and safety provisions for the event
-
the cultural board manages the relationship with the ops org
SamThu 13 Aug 2020 6:50AM
I agree for the most part, except for the following:
"members agree to the budget for the production" I think the elected board should make the decision; members should only make direct decisions on structural things and things the board invites them to.
Cultural org being the ticket vendor will depend on tax and liability implications, but I reckon you're right.
The relevant org for funding of art at Burning Seed is not obvious to me. I think that because art can be shown in multiple places (ie not just Seed) then the Cultural Org is the more appropriate one to allocate funding (so I do agree after all).
But I think the Cultural Org should come up with its own method for funding rather than us dictate it in this process.
Agree that Cultural org would be a great representative to negotiate insurance for artists.
Yep agree with everything else too.
Phil SmartMon 24 Aug 2020 10:00AM
Like Sam, I agree with most things, but the board and/or town council equivalent should make the budget decisions, much like it does now. The only other thing I'm not totally sure of is the idea of the event being thought of as a fundraiser and having fundraising targets. There's more to talk about around this, and how the cultural org overall funds initiatives.
Jo RobertsWed 12 Aug 2020 4:53AM
I think we should abandon the name Red Earth City Ltd for the entity that produces Burning Seed. I think that it is to closely associated with the outgoing directors and we need a new name that reflects the communities' expectations around a new entity .
Madeline FountainMon 24 Aug 2020 1:49AM
What is the feeling about Red Earth City remaining the "location" of Burning Seed though?
Susanne ParrisMon 24 Aug 2020 4:34AM
Unless there are very valid reasons to move, why would we? There's still room for growth. And most importantly, I know my way around ;)
Jo RobertsMon 24 Aug 2020 4:53AM
I don't have any issues with it remaining the location. We just have to factor in that it is likely to be flooded from time to time , and unavailable for the event - hence there has always been a push to find a Plan B site in the event of flooding.
'King' Richard MartinSun 23 Aug 2020 4:18AM
Out of curiosity does anybody know why Red Earth City came about and the concept of civic city as the foundation of our community? I ask this as I've never heard a discussion about this, which might have some relevance to what is being visioned.
Madeline FountainSun 23 Aug 2020 7:43AM
My understanding is that was an Australian facsimile of residential Black Rock City. Ten years ago Burning Man was still very much focused on BRC as the epicentre but it is interesting to see the recent pivot to a global cultural network. The Cultural Direction setting project of the last couple of years has seen every aspect of BRC and the BMP examined and amended where necessary.
Is there anything you would like to elaborate on Richard?
'King' Richard MartinSun 23 Aug 2020 11:51AM
That's an interesting interpretation, which is an appreciated contribution. If others have thoughts on this I'd welcome their interpretation and contribution.
'King' Richard MartinSun 23 Aug 2020 11:54PM
I'm also just as interested if people express the view that they either don't know or out of curiosity have thought about this a little and never fully grasped it.
I'm also not asking a trick question and there is no definitive answer.
Although, understandings formed around answers to the question, may possibly go to the core of what the production side of the Burning Seed gathering space is about and it's philosophical and practiced understandings toward bringing a community, with all it's multiplicity of micro communities and individuals, together, for a week long interaction to build Red Earth City, in a gathering space that we have come to know as the Burning Seed event, which is planned and worked upon year round.
Madeline FountainMon 24 Aug 2020 12:56AM
I think that part is relatively evident in the demonstrated history of the Australian event (and company) and would be the common understanding of the ephemeral city invented by the Burning Man founders. But BRC did not come about like that, it was borne of a tradition of Zone Trips that saw groups of artists venturing out to multiple secret and interesting locations, and they came to settle, over several years of different activity, at BRC. It evolved to become a city with all its multiplicity etc. but that was not the impetus for the project's existence; and has been identified as a current limitation to the culture. From inception the "project" was performance art and sculpture (and firearms) in random locations with zero organisation or bureaucracy.
I suppose the next steps are very much about evaluating and evolving the model (at least that is my approach). Robin's One Trick Pony observation really inspired me to stretch my imagination as to the possibilities of this restructure and I have drawn no small amount of inspiration from the founding days of artists doing interesting things in all sorts of places.
Madeline FountainMon 24 Aug 2020 1:31AM
The operational entity is the appropriate entity to focus on the building of an ephemeral city though so any insight into this would be great to read in more detail.
'King' Richard MartinMon 24 Aug 2020 1:34AM
Thank you Madeline, interesting thoughts and I'm also very interested to hear from others.
'King' Richard MartinMon 24 Aug 2020 1:46AM
An interesting insight to add into the discussion, which I know for those who may not have had the opportunity to venture over to Burning Man in Nevada, is that the name 'Black Rock City' comes from a place, which is the Black Rock Desert, which is the physical region upon which the Burning Man event is conducted. https://en.m.wikipedia.org/wiki/Black_Rock_Desert
Phil SmartMon 24 Aug 2020 1:28PM
I still don't think we should abandon the words or name of Red Earth City completely, and if we did it shouldn't be because of a small number of peoples' sensitivities around the directors. The name is part of our history and legacy and culture, and yes, while it's inspired by Black Rock City, it also has its own creation story and meaning, referring to the red earth that is found under our feet wherever we go across Australia that’s connects us always, whether we are at Burning Seed or not.
The other problem is that if we don’t repurpose REC (or even call it Red Earth Something Else) then we’ll have to come up with yet another name, as the two entities can’t have the same name… that would be painful;)
Susanne ParrisMon 24 Aug 2020 5:25PM
I agree with you.
Madeline FountainMon 24 Aug 2020 9:14PM
So the current options are as follows:
Sunburnt Arts (which makes me laugh every time because Sunburnt Arse 😂) would be the cultural org And Red Earth Productions would be the operational (after all it does relate to building residential Red earth city)
Red Earth Arts is the cultural org and Sunburnt Productions is the operational entity.
Sunburnt arts is cultural and sunburnt productions is the ops.
Personally I think maybe 2 is the best choice. The red earth unites us from the centre as Phil described. It allows for legacy (which I personally agree is important both legally and culturally) and more aptly aligns to the stated purposes of REC from inception. By removing “city” it allows for a national focus.
The ops name “Sunburnt something” was chosen in the vision group stage and that should not be forgotten or rejected. It allows that sense of “separation” from legacy for those who might feel that way (though they all appear to have vowed to turn their backs on Seed entirely so I don’t know why the committee feels compelled to capitulate.) This is really just a trading name That goes on contracts and legal documents so I don’t think it is as symbolic as the name of the cultural org.
(action item : register trademark for Red Earth City And Red Earth Arts ASAP)
Madeline FountainMon 24 Aug 2020 9:16PM
Ah. There is Already a Red Earth Arts Festival and Red Earth Arts precinct in WA...back to the drawing board??
Susanne ParrisMon 24 Aug 2020 9:20PM
So does that cover WA only or the whole of Australia
Can we not use Red Earth ...... possibly Productions or similar?
'King' Richard MartinMon 24 Aug 2020 10:37PM
It's very pleasing to hear this discussion opening up, with 2 more voices joining in adding their valued insights. May I still encourage more voices. Also, another interesting insight about the Red Earth City name is that it also refers to place. This is the red earth that stretches wide and far across the entire continent of Australia (Gondwanna Land). It is anywhere upon this land that we may gather and build the city. Location is not limited to a specific region and has very adapaptable possibility, encompassing a very wide footprint for the Burning Seed Event, currently located in the Matong State forest in NSW.
Susanne ParrisMon 24 Aug 2020 11:44PM
I like it!
Eric DorieanTue 25 Aug 2020 2:32AM
I like Red Earth as well. My submission for the name was Red Earth Dreaming
Jo RobertsTue 25 Aug 2020 4:27AM
it's controversial to use terms like 'dreaming' in this way if you are not recognised as First Nations
Susanne ParrisTue 25 Aug 2020 4:50AM
Let's do some brainstorming as to Red Earth .......
Eric DorieanTue 25 Aug 2020 4:50AM
Very good point
Madeline FountainTue 25 Aug 2020 4:59AM
Red Earth Arts & Culture
Red Earth Projects
'King' Richard MartinSat 29 Aug 2020 2:34PM
While the term 'Hub' has been introduced, for explaining, in part, the Cultural Organisation, it must be remembered, that if a dual structure wasn't being considered, the entity for the Cultural Organisation (AKA Hub) would operate as a one shoe fits all scenario.
It would operate in exactly the same way that the Red Earth City Pty Ltd company currently operates.
This is where the sole Red Earth City Pty Ltd company, in its constitutional purposes, incorporates the 2 Standing Committees:
(1) for operating Burning Seed, via the 'Burning Seed Town Council', and
(2) for operating potential external community outreach arts and activity programs, via the 'Burning Man Australia Community Board'.
This should be the starting point for everyone's thinking, where the Cultural Organisation (AKA Hub) replaces the function of the Red Earth City Pty Ltd company and its organisation, where the Cultural Organisation is to become the operator of the Burning Seed event and any external community outreach programs beyond the event.
It is the starting point because the underlying premise for making change to the status quo, seems to be entirely based on transitioning the 3 membership ownership, of the ATO approved (Income Tax Exempt), not for profit, self declared cultural organisation 'Red Earth City Pty Ltd', to a new type of not for profit entity, with a broad based membership, that is able to immediately apply as a charity with the ACNC, allowing this new entity to receive Income Tax exemption.
Down the track, if the new Cultural Org feels its worthwhile, it may also apply to the Register of Cultural Organisations (ROCO) for entry on the register of cultural organisations.
If this registration is successful, it would allow for the establishment of a Public Fund, with Deductible Gift Recipient (DGR) status, allowing those making donations to the Public Fund to claim their donation as a tax deduction.
Now, from the restructure discussions and the community survey, which produced the feedback for the Ancient Future Report (AFR), the idea of having a dual entity structure became a real and supported option, as a way of separating the risk, of conducting the Burning Seed event, away from the main broad based membership entity and any of its external community outreach programs beyond the event.
It also allowed for possibly assets and IP to be held in this main broad based membership entity, which is established to operate on a minimal risk basis, in the pursuit of its purposes.
This all led to the idea of having a Holding Entity and a Production Entity.
The Production Enity is owned and controlled by the Holding Entity, where in Australian Corporate Law the Production Entity becomes a wholly owned Subsidurary of the Holding company.
For a simple explanation of what a Subsidurary is, this Wiki is a good start:
https://en.m.wikipedia.org/wiki/Subsidiary
A subsidiary, subsidiary company or daughter company[1][2][3] is a company that is owned or controlled by another company, which is called the parent company, parent, or holding company.[4][5] The subsidiary can be a company, corporation, or limited liability company. In some cases it is a government or state-owned enterprise.
To achieved all of this, simply requires the Holding Entity to make the following statement of intent:
Statement of Intent - Holding Entity.
PURPOSES
1) to establish a wholely owned single member 'not for profit' subsidiary entity ("The Production Entity") to conduct an official Burning Man regional event ("The Regional Event”) on behalf and for the benefit of the broad based membership 'not for profit' entity Sunburnt Arts ("The Holding Entity");
2) to enter into a licence agreement with "The Production Entity”, established to conduct "The Regional Event", for the use of any trademarked or other registered business names in it's operation, which are either held or licenced to "The Holding Entity";
3) to clearly outline financial arrangements, in any licence agreement, for the use of names that allow the independent and full operation of the "The Event" by "The Production Entity", which are also for the financial benefit of "The Holding Entity".
4) to establish the Board of "The Production Entity" with the same Board members of "The Holding Entity".
Eric DorieanSun 30 Aug 2020 5:40AM
Thank you for writing that out Richard. I've said before and feel past endeavours have at least in part failed because they didn't bring the REC Directors. So appreciate being able to read your vision.
Reading the subsidiary definition I still wonder if its necessarily the correct term to use. If subsidiary is to own or control, is that necessarily what we're cresting?
In point number 2 the license agreement doesn't necessarily require for the production entity to be a sub subsidiary does it?
Not pushing for one way or another, but think it's an important conversation to have.
On point 4 there will be a lot of Board discussion to happen soon. I was thinking at least initially they would have the same boards, but as time go by the need for different Boards could make sense
'King' Richard MartinSun 30 Aug 2020 8:39AM
Thanks Eric and I hope my words above offer direction and substance.
I also hope they are helpful with what people could be wrangling with in their minds.
As I said, in the last Vision Session, this is the one area I have the most clarity.
In response to your questions.
1) Subsidiary definition
Please understand this is a simple wiki definition to give some meaning for people.
It's important to be 100% clear of ownership and control issues.
Yes the Holding Company must own and control the Subsiduary Production Company.
This is achieved with having a single membership of the Holding Company.
Categorically, we are not creating two separate broad based membership organisations.
We are creating one Broad Based Membership organisation, which is the Holding Entity, that has a single membership in the Subsiduary Operations Entity and therefore has complete control of this Operations Entity.
This way, nobody in the community, can be confused, or question, what entity they need to join, to own their stake (via their membership).
It empowers members of the wider community to buy into the Broad Based Membership Holding Entity to own their part.
2) Licence agreement
Its very specific that the Holding Entity is forming a licence agreement with the Subsidurary Production company it is establishing.
3) Same Boards
I wouldn't vary from this for control reasons, which can be discussed in the upcoming Board Vision Sessions.
Although, in the Production Entity, there is the most obvious opportunity for the constitution/rules to be written up where the Board delegates the operating of the "Regional Event" to a Burning Seed Town Council, exactly with how it is written up in the current Committee Guidelines.
This way the Board of the Subsidurary Production Company has a limited function, where it mainly in oversees the compliance requirements of the Subsiduary company, and other financial and legal oversight as required or asked of it by its bodies/committees established in its constriction/rules.
It would also administer relationships with the Holding Company & vise versa.
This is the golden opportunity to merge in the parts of the Committee Guidelines (for the parts relating to Burning Seed), to be incorporated into the constitution/rules of the Subsidurary Production Company.
It is also a golden opportunity to completely rethink the composition of the Town Council body.
It would make complete sense to look at making the positions on the Town Council elected positions.
To also fully empower the Town Council to fill vacancies in between elections.
Town Council would be structured as an independent body to the Production Company's Board.
Legally, any body (ie committee) mentioned in the constitution/rules of the Production Entity, has to be ultimately accountable to the peak body (AKA Board).
Although, a well written constitution will make clear separation of the Board and the Town Council, by defining their clear responsibilities and powers, so they work independently to each other and with each other, in pursuing their separately stated purpose.
Eric DorieanSun 30 Aug 2020 8:57AM
Thanks Richard.
That makes sense to me. The conversation at Membership Vision Session 2 did go towards getting legal clarification regarding the single member conversation.
With what you've said here the bit where I personally don't have clarity is how that would effect future orgs that are created. We've agreed there will be a process (yet to be decided) to create new orgs. It feels that having the same Boards for every future org would be an issue
'King' Richard MartinSun 30 Aug 2020 9:39AM
To be honest I'm not paying much attention to possibility of creating multiple future orgs, beyond a Broad Based Membership Cultural organisation Holding company and its Subsidurary Production company.
In reality it's an enormous challenge just creating one, yet alone two entities that function in a workable compliant manner.
Also, there would need to be clear benefit for creating future orgs.
At this stage, I can't see what orgs would need to be created and what real benefit they would provide.
With that said, I note that accommodating for future orgs has been mentioned, though its not something that I'm fixated with, nor wishing to be too distracted on.
If the Holding Entity & Subsidurary Production Company has a well defined committee section, like in the Committee Guidelines, it will be able to undertake a very wide range of project activities if need be, without the need to creating an org for this or an org for that, in the immediate term.
In relation to your question about the same directors required on the Boards of any other Subsidurary 'special project' companys that are established, that would need to be looked at on a case by case basis, where without knowing what the company is being established to do, I'm unable to give an answer of what the composition of the Board would be.
SamSun 30 Aug 2020 12:43PM
I agree Richard - and now think I might have added more chaos to this process than needed by referring to the possibility of other Projects in future. We should remain on-scope in order to make sure we don't inadvertently draft ourselves into a corner.
To that end I recommend that we attempt to place constitutional limits only where they provide structural integrity, and avoid building in mechanisms that may place limits we don't manage to identify now but which may cause problems in future. I can't imagine any specific examples right now, but I guess that's the point.
In any case, I agree that coming back to our remit of transferring Burning Seed to a community-centric structure is a helpful reminder.
Eric DorieanSun 30 Aug 2020 1:16PM
I think it's good to have brought it up. I really like it as a concept. I'm pretty sure @Phil Smart was keen to see to orgs being able to be created by the Cultural org. But agree it could be too much for a first go. As long as there isn't anything stopping the cultural org putting something like this into place then, I'm all for streamlining to get things moving forward as well
Madeline FountainSun 30 Aug 2020 12:42PM
Thank you for this clarification @'King' Richard Martin . I suppose calling it a "wholly owned subsidiary" makes it far more clear than a "one member organisation" as the terminology is more familiar.
Madeline FountainSun 30 Aug 2020 12:53PM
I fail to see how such a direct relationship of ownership and decision making responsibility can protect the assets in the case of an issue. If the Boards are the same then all roads lead to Rome in terms of liability.
'King' Richard MartinSun 30 Aug 2020 11:13PM
While it's necessary to question this, at the last Vision session, I went a long way to explain the legal separation of Holding and Wholly Owned Subsidurary Company, which I sense legal advice would reiterate.
Although, I would never want to stand fully by this, as legal advice may shed a different light.
Though, in addressing your stated position, withough being able to discuss a specific liability example, it's difficult to explain or examine how potential scenarios might play out, in this dual entity structure, where it's also noted that this is flagged for legal advice.
Without pre-empting where the advice is sought, personally, this is an area I'd like Tony Lang's opinion to be sought.
One thing to remember, is that regardless of whatever model is in place, directors can not run away from being personally liable, in certain financial scenarios, so they are never entirely protected under the corporate veil, as they might think they are, for situations where financial liabilities are involved, as they can be personally pursued if the entity is in place or not.
This emphasises, even more, the necessity for the board of the Holding company and the Wholly owned Subsidurary to be the same, so they are able to watch over the lay of the land like hawks and act decisively when matters of financial liability and solvency present.
As far as other matters of liability and protection of assets, the model I have been presenting may well be seen to endure, although as consensus has formed around getting advice, any presumptions here may be challenged where the best legal advice we can find is required.
Madeline FountainSun 30 Aug 2020 1:02PM
I had some insightful conversations today that have convinced me that the cultural needs to be much more than a passive Hub.
A hub is a thing that sits on my desk that lots of things plug into and it provides them with power and connectivity. That much I like and support.
But the Hub that has been described here will not qualify for ROCO or ACNC registration unless it can demonstrate that it is actively Advancing Culture.
'King' Richard MartinSun 30 Aug 2020 11:32PM
With a good, well written set of purposes for the Broad Based Member Cultural Organisation (AKA Hub), that are crafted to tick all the checkboxes required, firstly for ACNC charity registration and later on for possibly ROCO registration, there should be no problems with either registration.
The art is drafting these purposes to fulfil such criteria.
Rather than just saying what's there won't meet the criteria, there is a collective responsibility, by all of us, to start adding additional purposes that will satisfy such requirements.
Madeline FountainMon 31 Aug 2020 4:51AM
Here is the Guide to ROCO file:///C:/Users/madeline/Downloads/register-of-cultural-organisations-guide_1.pdf
Excerpts:
Page 8-9
Principal purpose
Subsection 30-300(2) of the Act:
Its principal purpose must be the promotion of literature, music, a performing art, a visual art, a craft, design, film, video, television, radio, community arts, arts or languages of *Indigenous persons or movable cultural heritage.
To be eligible for entry on the ROCO, your organisation must show that its principal (i.e. first, most important) purpose is the promotion of one or more of the specified cultural forms listed in the Act, which are:
• arts or languages of Indigenous persons
• community arts
• crafts
• design
• film
• literature
• movable cultural heritage
• music
• performing arts
• radio
• television
• video
• visual arts.
These are referred to throughout this Guide as the ‘specified cultural forms’. The Act does not allow organisations with any other principal purpose—including the promotion of other matters that may be considered ‘cultural’ in other contexts, such as traditions, norms, languages and religions—to be entered on the ROCO.
The term ‘promotion’ is not defined in the Act. Organisations on the ROCO may promote the specified cultural forms in a wide variety of ways, including (but not limited to):
• directly creating or producing art and culture for a public audience
• presenting or exhibiting art, culture and movable cultural heritage created or produced by others • educating the public about a specified cultural form, including through research and publishing
• providing training in an art, craft or cultural form, and
• preserving works of art or items of movable cultural heritage.
Taken together, your organisation’s ROCO application and supporting material should clearly explain what its principal purpose is, indicate which specified cultural form/s it promotes, and show how the specified cultural form/s are promoted through its objects and activities. Both the stated objects in your organisation’s governing document and your organisation’s current or planned activities are relevant to the Minister’s decision on whether your organisation meets the principal purpose requirement.
So I guess I am wondering if merely engaging a production company to execute the promotion of the art is enough @'King' Richard Martin ?
This provides a clue that you may be correct:
Excerpt page 10
"It is possible that your organisation’s governing document may not include clauses establishing its objects or purposes (e.g. because it has a separate or associated statement of purposes adopted or ratified by its members). If this is the case, you will need to provide copies of any other document setting out your organisation’s purposes and explain what status this document has in your organisation’s governance arrangements (e.g. that it was adopted by members at an Annual General Meeting, now forms part of the organisation’s decision-making processes, and may only be changed through a further vote by members).
While most organisations pursue their principal purpose directly through their own activities, it is also possible for an organisation to be entered on the ROCO where it pursues its objects indirectly—i.e. through other individuals or organisations—provided its governing document enables it to do so. Such activities include providing financial support to organisations and individuals through grants, awards, scholarships, prizes or direct partnership and the creation of assets that will be transferred to or owned by another entity. The Minister’s decision on your organisation’s principal purpose will consider whether your organisation’s governing document enables it to undertake these activities. For further information on indirect pursuit of an organisation’s principal purpose see chapter 3 of this Guide"
Madeline FountainMon 31 Aug 2020 5:30AM
Here is Chapter 3
3. Indirect pursuit of your organisation’s principal purpose
Organisations entered on the ROCO use their resources, including gifts and contributions made to their public funds, to pursue their principal purpose through a variety of ways. For many organisations this includes paying staff wages and/or procuring goods and services from businesses, suppliers and contractors. However, sometimes organisations applying for, or entered on the ROCO want to use their resources—including gifts and contributions made to their public funds—to pursue their respective principal purposes indirectly rather than directly, i.e. by providing financial support to other individuals or organisations to undertake cultural activities, rather than, or as well as, by undertaking cultural activities themselves. This support might take forms such as:
• awards, scholarships and prizes to individual artists or practitioners
• making grants to other organisations
• auspicing philanthropic grants on behalf of an individual artist or other organisation, or
• funding the purchase or creation of an asset that will be owned by or transferred to another entity.
While these or other indirect mechanisms can be effective ways of pursuing an organisation’s principal purpose, they pose certain risks. This is because while an organisation on the ROCO has been subjected to considerable scrutiny to ensure that tax deductible donations it receives will be used consistently with the requirements of tax law, other individuals or organisations to which it may wish to pass on donated moneys (or assets acquired with donated moneys) have not necessarily been subject to the same level of scrutiny.
A high degree of transparency about these arrangements is therefore required to enable the Minister to make a fully informed decision on whether an organisation meets the following legislative eligibility criteria for the ROCO:
• Principal purpose criterion: any provision of financial support to other individuals or organisations must be consistent with a principal purpose of promoting one or more specified cultural forms.
• Public fund criterion: any financial support for another individual or organisation to be provided from the applicant’s public fund must be clearly enabled through the objects of the public fund (as expressed in the applicant’s governing document) and consistent with ATO’s guidance on public funds and result in the promotion of the specified cultural form(s) that it is the principal purpose of the applicant.
• Not-for-profit criterion: any money or assets to be transferred from the applicant to another person or organisation (except as payment for goods or services received) must not constitute the payment of profits/surplus, or the transfer of property, to the applicant’s members/beneficiaries/controllers or owners.
If your organisation intends to pursue its principal purpose indirectly, either wholly or in part, your application and supporting material will need to clearly explain how your organisation decides which organisations or individuals it will support and the arrangements in place to ensure that those organisations or individuals will only use any money or property transferred from the public fund in ways that advance your organisation’s principal purpose.
Broadly speaking, financial support may be provided to individuals and organisations in one of two ways: via an open application and assessment process, or through direct partnership. The types of evidence required to demonstrate whether your organisation meets the above criteria will depend on the method it uses to distribute funds to others.
Eric DorieanTue 1 Sep 2020 8:49AM
Thanks I didn't realise until reading this the importance of purposes like this
SamThu 1 Oct 2020 3:04AM
Updated diagram to remove relationship type (which is not yet determined) and to make it look less hierarchical. Also I've labelled some relationships to help structure future conversations on relationships.
Madeline FountainThu 1 Oct 2020 7:23AM
Great work thank you, Sam.
Eric DorieanThu 1 Oct 2020 12:01PM
Really happy to see the diagram looking less hierarchal. Nice work.
I think it makes sense to have a name of the proposal. Just if it was to move forward, perhaps it doesn't need a name as it's just a function of the Cultural org? Just saying that in regards to some of the consfusion about names in the past
Madeline FountainWed 14 Oct 2020 12:30AM
Isn't it called the Hub model?
Susanne Parris ·Fri 17 Jul 2020 9:05AM
I have a question. Let's look at this in a hierarchical manner. We have an umbrella organisation. Let's say its called Red Earth City...... Then underneath that we have Sunburnt Arts... and then any other groups we feel the need to create. Am I on the right track??