I'm not a lawyer but I think you are wrong.  You wouldn't lose your non profit status if a for-profit made a donation to you so why would you lose it because they pay you to do a show?  We have done lots of dinner theater in local restaurants - the price of the dinner includes a ticket to the show.  What is the difference between people paying directly for a ticket or having the venus collect it for you or having the restauraunt include it in the price of the meal?  The restauraunt is not making money off your show, they are making money off the meals they sell.  Your agreement with them is either a fixed amount or so much per meal sold.  In either case, you keep all that money.

Remember that the non profit test is what you do with the money you make.  As long as any excess (income less expenses) goes to further the charitable purpose of your organization and not to an individual or group of individuals I think you should be ok.  

To go further, why would that be any different than any for-profit venue who books in a show done by a non-profit?  We have been booked into many for-profit resorts in our area and have rented their venues too.  Does it make any difference who collects the money?  I don't think so. 

As I said I am not a lawyer but I can't see how we could lose our non-profit status because we do a show in a for-profit venue, restauraunt or not.

I agree with both of you...and have been doing dinner theatre like this for years.  This comment actually came from an Attorney for the Arts in our area...a friend's newly formed theatre group used them to fill out their paperwork and he told them to avoid dinner theatre like the plague because it was not a nonprofit event.  It makes no sense to me, either.   I will investigate further and see what I can find.  Thanks to both of you for your input.

I don?t know your laws!
But I think your not for profit status, would only concern how you conduct your Incorporated group, not how others may profit by your endeavours.
I?m sure the local cafes & business do profit in some way, from any group, during rehearsals & shows.
Put the question to your Taxation department!

Not a lawyer here either, but we have been down the 501 C3 road a few times. Each time the results have come back about the same.  It doesn?t really matter how you make it. (Don?t rob banks, that?s not covered here), and it doesn?t matter if you pay for things or pay people.  It only matters how you spend it.  You can: Pay your bills, provide for your facilities up keep, and pay your production costs. You can?t: Take your membership on an all expense paid cruise.  Bottom line is that the funds are used as stated in your state approved bylaws/constitution and following your states code/revised code on the conduct of not for profit/non profit organizations.  Most simply state that the proceeds can?t be used for the direct ?benefit of the membership? (Darn, I always wanted a cruise!)