A generation retires. Land is sold. Markets shift. Changing circumstances sometimes cause farms to reconsider their business structure, and sometimes, a nonprofit is on the list of considerations. Considering the many benefits farming brings to communities and families, should a farm consider forming a nonprofit organization to ease difficult transitions? There’s a lot to consider.
Farming trends come and go, and it feels like there’s a bit of a movement towards nonprofit business structures. Vermont and Wisconsin are two such states that have extensive agricultural traditions, and this local news article explores the trend in Vermont while a Wisconsin-focused program explores options in the Midwest. Both of these news sources convey the sparkle and light that a nonprofit structure seems to throw. Just the idea of a nonprofit itself conveys hope and purpose. Forming a nonprofit can act as a symbol and a memorialization of the farm’s meaning.
But does a nonprofit offer a viable business structure for farmers and ranchers? The narrative is worth looking at from a few different angles. There is nothing about a nonprofit business structure that alters the forces of market demand and supply. Nonprofit entities do not generally pay taxes on their profit, that much is true. But the punishing consequences of taxes on profit aren’t a problem many farmers are fortunate enough to struggle with on a regular basis.
The nonprofit business structure can also promise the opportunity to receive tax-deductible donations. Donations are a revenue source that requires its own investment and cultivation to yield fruit. Some farmers may find their skills transfer to soliciting donations, but others will not.
Nonprofits come with a very different governance structure than a for profit business. In essence, nonprofits do not have owners. The nonprofit is responsible to the community at large, and this is symbolized by governance through a board of directors. When a farm is turned into a nonprofit, the farmers are no longer owners, which is a significant shift in control and equity-building.
Farm Commons is taking farmers on a deeper dive into the world of nonprofit agricultural operations this fall and into Spring 2025 through our brand new Farming Not-for-Profit Experience Team, a three-session paid cohort program to help not-for-profit farmers get solutions to common not-for-profit legal and regulatory questions. The application portal is now open and closes on August 30, 2024, and spots are limited. Learn more and apply here.