Another Milestone Achieved; SACG Obtains Tax-Exempt Status

Oh happy day! It’s raining (but who knows for how long).

This morning’s mail brought a Determination Letter from the Internal Revenue Service confirming that the Stoddart Avenue Community Garden, Inc. is “exempt from Federal income tax [as a public charity] under section 501(c)(3) of the Internal Revenue Code. Contributions to you are deductible under section 170 of the Code. You are also qualified to receive tax deductible bequests, devises, transfers or gifts . . . . “ With this lovely letter, we can apply for grant funds without finding and working with a fiscal agent/sponsor sufficiently in advance of the grant deadline. The gifts and contributions we receive from our supporters can now be deducted on their tax returns (if they itemize). And, once I figure out how, we will likely be exempt from state sales tax as well. So, this is another step towards long-term financial sustainability.

Obtaining a tax exempt Determination Letter is a long and time-consuming process. As you can imagine, the Internal Revenue Code (and all of the supporting and explanatory publications, rulings and decisions) are lengthy, complicated and detailed. Once you have read and digested all or most of them, you are required to complete a Form 1023 – the application for tax exempt status. This will also require you to provide supplementary information and attach other documents in support of your application. After going through all of that, you then pay the IRS $400 to read, and hopefully approve, your application. It was a three-month wait for us after submitting our application in May.

It probably took me longer to draft our application than it should have, but I obsess over everything. I am glad that I did so, because we did not receive a single follow-up question from the IRS. A friend at the Columbus Foundation had suggested that I first review the 1023 applications submitted by other community gardens. Unfortunately, there are not that many standalone community gardens (in that they are often affiliated with a church or other charity). However – get this – not a single community garden that I could find in Central Ohio or nationwide would share its 1023 application with me even though they are required to do so under federal law. Is that the most ridiculous thing you’ve ever heard?!! One told me that they lost it. Lots of finger-pointing at whose fault it was. Another told me that they did not want me to benefit from their hard work and inferred that I was a lazy freeloader.  Really? Craziness.

Luckily, I am not that petty and am attaching our application and supplement (with home addresses redacted) in case any other community garden wants to get some comfort level with what to expect. You cannot just copy from our application verbatim because your application will be fact specific to your particular circumstances and activities. You should also if at all possible retain a certified public accountant or lawyer to help you navigate this process. You can contact the Columbus Bar Association’s pro bono referral service to see if they can find a local attorney who will volunteer to help you free of charge. (While most pro bono attorneys help indigent individuals, the corporate attorneys prefer to help organizations with issues like this). If they can’t find someone quickly, then call Marion Smithberger at the CBA and beg him to twist some arms. Assure the CBA that you expect to do most of the work, and will not put everything off on the lawyer, but need experienced help and judgment in reviewing what you are doing.

I have not attached all of our supplementary information because it is so extensive (i.e., bylaws, resolutions, newsletters, etc.). However, I will make this available to review upon a proper request in compliance with federal law and will not lose it.

Now, back to my happy day jig. And lunch.