New England farm charity reorganizes after tax hit
A novel program intended to raise money for financially strapped New England dairy farmers and educate consumers about the benefits of local farms isn't delivering as much help as organizers would like because it had to pay more than $60,000 in taxes.
The Keep Local Farms program helped 1,370 farmers last year, to the tune of $100 each. But an audit that the program had sought by an accounting firm found that it owed $63,000 in taxes, or nearly a third of the $220,000 it raised over two years.
The program, whose funds were handled by a dairy cooperative, is now reorganizing so that the funds will be managed as a nonprofit. It's also rethinking how the money will be used to help farmers.
The program didn't do anything wrong, said Diane Bothfeld, deputy secretary of the Vermont Agency of Agriculture, which worked with the New England Family Dairy Farms Cooperative and the New England Dairy Promotion Board to launch the program in 2009.
"I think there could have been more attention paid in the beginning when it was all getting started but ... I don't think there's any malfeasance here," she said.
The program was set up to get consumers to help dairy farmers in New England, which has lost 66 percent of its dairy farms in 30 years due to low milk prices paid to farmers, and high feed, fuel and labor costs.
In October 2009, the average price paid to farmers fell to $11.30 per hundred pounds of milk, while it cost them at least $18 per hundred pounds to produce it.
The goal's three goals were to allow dairy farmers to share their stories about their farms, to encourage people to consume as many dairy products as they can, and to build a fund to be able to send some money back to the 75 percent of the region's dairy farmers who belong to the regional dairy cooperative.
Universities and other institutions were urged to charge a little more for dairy products in their cafeterias, with the proceeds going to farmers.
A Keep Local Farms logo was also developed and businesses and individuals could also contribute.
Six colleges and universities signed up, including Harvard and the University of Vermont, which contribute 10 cents for single serve milk sold.
Boston Medical Center, Ski Vermont, some Ben & Jerry's scoop shops and others also contributed to the program while others, such as Roche Brothers and Hannaford's Supermarkets, have displayed signs about the importance of local dairy farms in their stores, such as the land they provide for recreation,
UVM, for example, has raised $13,293 since the end of 2011 and has displayed photos and information about local farmers.
The program was developed the Vermont Dairy Promotion Council, the New England Dairy Promotion Board and the daily cooperative, which handled the funds.
The effort raised $58,166 in 2010 and nearly tripled that in 2011, raising $161,489.
Of the $220,000 grand total, $137,000 went directly to farmers last year, and roughly $13,000 was spent on administrative expenses, including the audit by the accounting firm, a part-time bookkeeper and the executive director of the cooperative.
"It really came to light that the cooperative model that farmers are very accustomed to wasn't quite the best fit for managing these funds," said Bothfeld.
A New York company was hired in 2011 to evaluate the program and come up with a long-term business plan.
After interviewing dairy farmers, Karp Resources recommended instituting a nonprofit 501c3 corporation.
It also advised the group to allow for grants for farmers, scholarships and other opportunities that could make dairy farms more viable.
But the top priority, based on interviews done with dairy farmers, was to educate consumers about local dairy farms and farm families and why those farms are important to everyone in the region - such as for their open land for outdoor recreation and wildlife, economic activity in addition to their dairy products.
"Dairy promotion has always been difficult in that we know that we are putting out a great quality product. The issue is getting consumers to choose our product over the diversity of and the incredible, exponentially expanding, array of choices that they have when they go into the store," said Beth Kennett, a dairy farmer in Rochester, VT.
If the real goal is to sustain dairy farms with something meaningful, then organizers had to focus on what was valuable to dairy farmers, said Gary Wheelock executive director of New England Dairy Promotion Board.
The program will still have to pay taxes in 2012. But now the money will be managed as a nonprofit fund through the Vermont Community Foundation and could go to grants and projects that could help farmers and on a longer basis than a $100 check.
For example, it could be used for energy efficiency, giving farmers a grant to get an energy audit of their farms, which could save individual farmers thousands of dollars, organizers said.
As Bothfeld put it, the idea is now "instead of giving them a fish, teaching them how to fish."