Roll-Up Vehicles (RUVs): A Game Changer for Nonprofit Arts Organizations
What if nonprofits could raise money not just through donations but by offering real investment opportunities to their supporters? Imagine backing your favorite Off-Broadway musical or museum exhibit — not just with a tax-deductible gift but with a chance to earn a financial return if the project succeeds.
In this article, I’ll explore how Roll-Up Vehicles (RUVs) can revolutionize funding for nonprofit arts organizations, allowing both accredited and non-accredited investors to participate in mission-driven ventures. I’ll also share a real-world case study: how I’m testing this innovative approach with The Apple Boys, an Off-Broadway musical, offering supporters the choice between traditional philanthropy and commercial investment.
Whether you’re a nonprofit leader, an arts enthusiast, or an investor looking for new opportunities, this could be a game changer. Keep reading to find out how!
Nonprofit arts organizations are constantly seeking innovative ways to diversify revenue streams and engage new donors.
You’ve probably heard of Kickstarter and GoFundMe, the kings of crowdfunding. But it’s important to note that neither platform facilitates investments or tax-deductible donations. With GoFundMe, you’re purely giving out of the goodness of your heart, often to support personal causes or emergencies. With Kickstarter, your motivation might be to snag a special perk as an early adopter, but there’s no equity or financial return involved — just the promise of being part of something new and exciting.
Traditional philanthropy remains a cornerstone of nonprofit funding, but new financial models, particularly those borrowed from the world of venture capital and commercial investment, could provide additional pathways to sustainability and growth.
One such model, the Roll-Up Vehicle (RUV), presents a unique opportunity for nonprofits and mission-driven ventures to attract new supporters — both philanthropically and as investors.
What is a Roll-Up Vehicle (RUV)?
A Roll-Up Vehicle (RUV) is a pooled investment structure that allows multiple smaller investors to collectively invest in a single entity. This is particularly useful for non-accredited investors — individuals who do not meet the financial thresholds set by the Securities and Exchange Commission (SEC) to directly participate in private investment opportunities. Traditionally, private investments in startups, real estate, and commercial productions have been limited to accredited investors — those who earn more than $200,000 annually (or $300,000 jointly with a spouse) or have a net worth of at least $1 million (excluding their primary residence). RUVs provide a mechanism for non-accredited investors to participate in these opportunities by aggregating their funds into a single investment vehicle.
How Nonprofits Can Leverage RUVs
Many nonprofits rely on philanthropic contributions to sustain their work, but the rise of investment crowdfunding platforms like AngelList, StartEngine, and WeFunder has opened new avenues for engaging supporters in mission-aligned commercial ventures. Instead of relying solely on donations, nonprofits can offer supporters the chance to invest in commercial projects that align with their mission.
Comparing the Big Three: AngelList, StartEngine, and WeFunder
AngelList
Pros:
Strong reputation in the tech and startup space
Access to a large network of accredited investors
Sophisticated tools for managing investor relations
Cons:
Primarily geared toward tech startups and venture capitalists
Limited focus on social impact initiatives
Exclusivity to accredited investors, limiting broader participation
StartEngine
Pros:
Open to both accredited and non-accredited investors
Eats its own dog food — investors can actually invest in the StartEngine platform itself
Well-established in the crowdfunding arena
Provides robust marketing and promotional tools
Cons:
A pure for-profit model led by a well-known investor with questionable motives
No specific alignment with social impact or nonprofit missions
Fees and costs can be relatively high
WeFunder
Pros:
B-Corp status aligns with social impact initiatives
Open to all types of investors, democratizing access
Strong community engagement tools
Emphasizes mission-driven projects
Cons:
Still a for-profit entity, which might not align with every nonprofit’s philosophy
Regulatory complexities when combining nonprofit and for-profit strategies
Why WeFunder is the Best Choice for Nonprofits
While all three platforms offer valuable features, WeFunder stands out for nonprofits due to its B-Corp status. As a B-Corp, WeFunder adheres to a double bottom line that balances profit with social impact. This aligns closely with the mission-driven nature of nonprofit organizations and offers a unique advantage when exploring for-profit subsidiaries.
Nonprofits are increasingly using for-profit subsidiaries as a strategic tool. This is not only legal but also a well-established practice in the sector. These subsidiaries can generate revenue through business activities, raise funds through traditional investments, and channel profits back to support the nonprofit’s mission.
For example, for decades, social justice organizations focused on combatting recidivism have owned and operated restaurant franchises so they can offer job training and employment for marginalized communities.
How Nonprofit Arts Organizations Could Use an RUV
Arts leaders often say, “If we had more money, we could do this.” Well, the RUV presents the opportunity to do just that with very little risk to the nonprofit itself. In fact, the financial risk is transferred to the outside investors, and the organization doesn’t even need to move forward unless the investment goal is reached (since investor funds for RUVs are held in escrow and returned if the RUV’s fundraising goals, stated upfront in the offering documents, aren’t met).
Examples of RUVs in Action
Investing in New Exhibitions or Productions with Crossover Appeal:
A museum looking to present an exhibit with broad appeal (e.g., Art of the Brick) could use an RUV to scale up a traditionally limited offering. Investors would earn a share of any revenue generated from ticket sales, streaming, digital downloads, concessions, merchandise, and licensing, while the nonprofit benefits from increased visibility and audience engagement.
An opera company could launch a “production for the people,” where shares in a new opera, formed as an LLC, could be allocated to investors. Shareholders could even participate in key decisions if they achieve certain investment thresholds, perhaps getting a vote on casting choices.
Boosting Returns from Existing Profit-Generating Centers:
Ballet companies thrive on The Nutcracker — many Executive Directors will tell you it makes the rest of the season possible (unfortunately, there is no equivalent blockbuster for symphony or opera companies). A for-profit company spotting a revenue-generating center like that would likely invest more to scale it up. An RUV could offer the same opportunity to nonprofits.
If Nutcracker performances are frequently selling out, an additional investment could enable a ballet company to double-cast the production at a second venue, taking a calculated risk it otherwise couldn’t afford due to high upfront costs.
Real Estate & Venue Expansion:
A cultural organization seeking to acquire or renovate a historic venue — or build something new, such as much-needed affordable artist housing — could attract investors through an RUV. These investors might not typically donate to the arts but could be interested in an asset-backed investment with potential rental income or increased property value as a return. Large universities already do this with their real estate portfolios, limiting investment to accredited investors. Social services organizations frequently engage in public-private partnerships, leveraging outside investment for projects with benefits like air rights and increased development potential.
No nonprofit has yet democratized investment in commercial real estate, however. There is a tremendous opportunity here, especially in revitalizing blighted neighborhoods where traditional developers see little incentive and there are no government-driven changes on the horizon.
Creating a Film Project:
Crossover projects — such as musicals with classical influences, compelling stories about classical figures, or documentary series — often have significant commercial potential. An RUV could enable classical music fans to invest in a commercial theater or film production tied to the nonprofit’s mission, aligning artistic impact with financial opportunity.
Maestro with Bradley Cooper did quite well. It’s a shame that the many nonprofit organizations that propelled Bernstein’s career didn’t share in those returns.
Developing Digital Media Ventures:
A classical music nonprofit could create an educational platform offering online music lessons, behind-the-scenes content, and virtual performances. Through an RUV, small investors could help fund the platform’s development, with potential returns from subscription fees, ad revenue, and partnerships. While traditional donations could support this, an RUV allows small investors, especially technology-minded younger investors, to participate and potentially benefit financially from the platform’s success.
In all these instances, supporters could choose to donate through the nonprofit arm (ensuring tax deductibility) or invest through the RUV, with potential returns if the project generates recurring revenue or exits through a profitable sale. For-profit organizations would love to raise money philanthropically but obviously can’t. So why should nonprofits handcuff themselves unnecessarily? They can do both — having their cake and eating it too.
A Detailed Example: Funding a Hypothetical Touring Initiative through an RUV
Let’s consider an example of how a classical music nonprofit could successfully utilize an RUV.
Scenario: A Chamber Orchestra’s Self-Produced International Tour
A renowned chamber orchestra is invited to perform at a major international festival, but traditional fundraising efforts fall short of covering travel and production expenses. To bridge the gap, the organization could create a Roll Up Vehicle (RUV) to fund a larger, self-produced tour, allowing small and mid-sized investors to contribute in exchange for a share of the tour’s future revenues.
Investors would receive a portion of the ticket sales, sponsorship deals, and merchandise revenue, enabling the nonprofit to pursue an ambitious project like this without jeopardizing its operational budget. These projects almost always lose money due to a lack of marketing and PR support, which is notoriously difficult to fund philanthropically. By allowing direct investment, an RUV could cover these critical costs, which are required to put butts in seats and ultimately attract lucrative corporate sponsors.
This innovative approach not only mitigates financial risk for the organization but also aligns artistic vision with market-driven strategies, offering a sustainable path to growth and impact.
How It Works:
Nonprofit Engagement: The orchestra continues to seek tax-deductible donations for education and outreach components of the tour.
Investment Opportunity: Supporters who want to participate commercially can invest in the RUV, which pools capital to fund travel, production, and marketing expenses.
Revenue Generation: The orchestra monetizes the tour through ticket sales, sponsorships, streaming deals, and merchandise, ensuring potential returns for investors.
Investor Benefits: Investors share in any profits generated and receive VIP perks such as exclusive behind-the-scenes access, priority tickets, and signed memorabilia.
Impact:
The orchestra reduces financial risk by supplementing philanthropic support with impact-driven investment.
Many more supporters — especially younger people — engage in the mission through innovative financial participation.
The nonprofit builds long-term financial sustainability by creating new revenue channels beyond donations.
An Actual Real-World Case Study
I am currently testing the RUV approach with The Apple Boys, an Off-Broadway musical I’m actively supporting. Those interested in helping out have two ways to get involved:
Traditional Philanthropy: Supporters can donate to The Apple Boys Foundation, which funds charitable and educational performances and supports barbershop harmony organizations. These contributions are tax-deductible and directly advance the nonprofit’s mission.
Commercial Investment via an RUV: Instead of (or in addition to) making a charitable donation, supporters can invest directly in the commercial production of The Apple Boys through a Roll Up Vehicle that is being offered through WeFunder. Both accredited and non-accredited investors can back the show, potentially earning a financial return if the production succeeds.
While The Apple Boys is a commercial production, its alignment with nonprofit organizations such as the Barbershop Harmony Society and various nonprofit theaters made an RUV an ideal choice. Initially, we raised funds through traditional high-net-worth investors. However, to broaden our base and engage the passionate barbershop community, we leveraged WeFunder’s platform to allow everyday supporters to participate, for as little as $100.
We just launched the RUV and we’ve already seen firsthand the benefits of this innovative approach. This strategy not only helped us raise additional capital but also deepened our engagement with a community that shares our artistic vision.
Addressing Concerns about Unrelated Business Taxable Income (UBTI)
One common concern with RUVs is the potential for Unrelated Business Taxable Income (UBTI). While this is a valid consideration, nonprofits can navigate this challenge by carefully structuring their RUVs. Investors are typically aware of tax consequences, and as long as the nonprofit maintains a balanced approach, there should be no risk to its tax-exempt status.
Conclusion: A New Path Forward for Nonprofits
RUVs, and particularly WeFunder’s platform, offer nonprofits a novel way to think about funding and engagement. By embracing this model, organizations can tap into new financial streams while staying true to their missions.
As I continue testing this approach with The Apple Boys, I’ll be sharing insights and lessons learned. If you’re interested in exploring how RUVs could work for your nonprofit or mission-driven project, let’s connect!
