It’s an old joke among farmers: “I should really form a nonprofit organization because I certainly don’t make any profit!” While this may resonate within the farming community, in actuality running your farm as a nonprofit organization is not the right choice for most farms. However, it can be the right fit for farms with a truly educational and charitable mission. In our free resource, Basic Considerations for Choosing a Nonprofit Farm, you’ll learn basic motivations and limitations about the nonprofit model so you can make an informed decision.
For a deeper dive into farms and non-profits, read our Chapter 8: Nonprofit Fundamentals (11pgs.) from the Farmers’ Guide to Business Structures. This guide explores when a nonprofit structure is truly the right choice for a farm and explains the process for setting one up. For our most comprehensive look into the nonprofit structure, read Exploring Qualifications for a Nonprofit Farm. This guide explains the necessary legal requirements for forming and maintaining a 501(c)(3) nonprofit to set you and your farm up for success.
Nonprofits aren’t the only way to do good in your community. For-profit farms often donate produce, meat, and other farm products to community members and organizations. These efforts may be infrequent or a part of regular business operations. Either way, there may be a tax benefit available to for-profit businesses making frequent and/or large donations of food that can help with sustaining both the business and its charitable offerings. Learn more in our free Basics of Food Donations and Bartering as a Farm.
Also keep in mind that the nonprofit model is not the only way you can run an educational farm. Check out our resource, From the Field: An Educational Farm’s Path to Choosing Its Business Structure (11pgs.) to learn more about your options.
You may have heard about B Corps or L3Cs, and if you’re curious about those options be sure to read Exploring Social Purpose Business Structures to learn about social purpose entities that function as alternatives to 501 (c)(3) nonprofit corporations by incorporating a social mission into the organization’s structure.
Because the nonprofit entity is unsuitable for most farms, many folks will want to explore other options. If that sounds more like you, start with our Farm Business Structure Basics. It answers the most frequently asked questions farmers have when choosing a business structure, such as: I’m not sure I want to form a business entity? Can’t I just sell my products or services? Which one is better – a corporation or an LLC? If you are more of a visual learner, and want to see all your business structure options, follow the flowchart in our free Understanding Your Options which is Chapter 2 of our Farmers’ Guide to Business Structures. Through a series of Yes/No questions, this flowchart leads the reader to business structure options that are likely to fit the farm’s needs. Watch Farmers Speak on Business Structures to hear from farmers Phoebe and Hector of Hawk’s Nest Healing Gardens in North Carolina as they share about their decision making process when choosing between a non-profit or LLC.
For audio learners, listen to our Podcast Episode 5: Farm Like You Mean Business! This podcast is a basic introduction to business entities for farms. You’ll learn about sole proprietorships, partnerships, LLCs, and corporations as the hosts explore the big question: What’s best for your farm enterprise? Hear directly from farmers about their personal experiences with tax issues, organizational documents, and more.
