Friday, February 11, 2011

What is Your Non-profit Status?

The President of the River City Harvest, a community garden in Great Falls, Montana, states “and we're running into a big bump in the road when it comes to our 501(c)3 application. They turned us down because they said we're a social group and not for the poor, etc. We charge $25/season for a 600 sq ft plot and $5/season for 100 sq ft to be able to reach all income levels. People can grow a heck a lot more than $25 worth of food in a 600 sq ft plot. We also have plots set aside to grow food specifically for Meals On Wheels and the local food bank.

We also helped the Salvation Army start a garden. It was their land and water, but we plowed, fertilized, provided the seeds/plants and volunteers. They harvested nearly 5000 lbs of vegetables for their family services program. It's just frustrating. I wondered how others are set up, and how you explained what you're doing so the IRS could understand it.”

She received this response from a fellow Community Gardener: “The 501 c3 is for educational organizations. Do you do workshops or on site garden classes? If you do, did you include that information in your application? I looked at your web site, keep in mind that it is an educational tool, for example the article on flea beetles. Also when you built the garden for the Salvation Army if you worked with volunteers that is kind of training should be presented as an on-site educational workshop.

From another Community Garden expert: “It sounds like you are running an undeclared not for profit or a not declared charitable group. This open ended arrangement is always looked at by the IRS or Canada Tax in my case as a for profit enterprise until proven differently. A lot of the groups that started out as spontaneous "help the community" gardens end up becoming profitable gardens several years later. How can the government assess that such a transformation has not occurred?

By attaching the garden projects to a church, or by becoming a sanctioned community program under the local municipal government, or by being adopted by a community center or the Salvation Army they would have assurances that this transformation to a for profit would not occur.

As long as the program appears to be run under an acceptable authority and has supervision all questions of tax forms should clear up. You will just need the paper work proving the connection and programs are real and that the consumers of the produce are receiving them at below cost."

My advice is for you to contact a lawyer for some real legal advice.

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