Protecting Diversified, Direct-Market, and Value-Added Operations with Smart Business Structures, Written Agreements, and Regulatory Compliance

Protecting Diversified, Direct-Market, and Value-Added Operations with Smart Business Structures, Written Agreements, and Regulatory Compliance

Summary

2015 was a banner year for our project in terms of deliverables! We finshed our huge collection of print resources, reviewed them, and formatted them with professional, attractive design. (We combined several of the distinct resources proposed in our application into the very detailed “Farmers Guide to Business Entities.) They are added to this report. We concluded our legal services with several midwestern farmers, having proved the concepts incorporated into the educational print resources. We finished our video project, complete with illustrations and animations that match our print resources for consistent marketing. The files are too large to attach here, but we would be happy to provide them to SARE for download at any time. All our webinars and workshops were scheduled and outreach was in full force. Resource distribution and workshops are extending into 2016, as is the evaluation process. 

With nearly 2000 farmers reached so far, we are looking forward to very robust impacts and outcomes for our final report. Business Entities Guide FINAL Promissory Note Guide FINAL Land Contract FINAL

Objectives/Performance Targets

The following is the Approach, Activities, Methods and Inputs section from our original grant application. We have three program areas and several outputs for each area. The outputs are numbered beneath each area. I have listed our current status for each target and detailed completed items.

Create and Distribute Educational Materials

1. Survey farmers on three legal subject areas: Completed in 2014
   1. Survey was successfully developed, distributed, and analyzed.
2. Hold 2 focus groups: Completed in 2014
   1. We held a single focus group and did personal interviews to supplement, rather than host two groups.
3. Research legal issues: Completed in 2015
   1. We finished all our research for this project by September of 2015. It was a massive undertaking, that resulted in really good product.
4. Draft supplementary model contracts/agreements: Completed in 2015
5. We completed a detailed, extensive “Farmers Guide to Business Entities” with the following chapters. Each chapter is being distributed separately as well:
   1. Farmers’ Sole Proprietorships and Partnerships Guidebook
   2. Farmers’ Nonprofit Guidebook
   3. Farmers’ LLC Guidebook
   4. Farmers Corporation Guidebook
   5. Anti-Corporate Farming Law guide
   6. Multi-farm Issues in Business Entities
6. We completed a guidebook on financing through land contracts, including a model land contract, titled “Financing Farmland Through an Effective Land Contract: A Toolkit.”
7. We completed a guidebook on using personal and community loans to finance a farm operation, titled, “Financing Your Farm Operation Through Personal Loans: Promissory Notes.”
8. We also created and distributed two introductory resources early in the project to begin generating interest: 1) a comparison chart of the business entities available and 2) a checklist for creating an LLC. We have since replaced these initial materials with ones of much greater detail. They achieved our objective in generating early news and getting us contact information of the farmers interested in the subject.
9. Engage a network of attorneys and farmers for review: Completed
   1. We have recruited several attorneys and farmers to serve as reviewers
10. Revise materials based on reviewer feedback: Ongoing into 2016.
    1. Our materials were reviewed by 3 of our reviewers in 2015 in their unformatted version. The formatted versions need another stage of review, begun in 2015 and ongoing into 2016.
    2. We are continuing ongoing review of our materials with our network of farmers and attorneys
11. Disseminate materials to farmer and educator audiences: Ongoing into 2016.
    1. In 2015, we began distributing our materials to farmers and educators with hundreds of people accessing our webinars and print materials. (See Accomplishments for numbers). The process is ongoing into 2016.
12. Create videos of farmers who have made changes: Completed in 2015.
    1. We created 3 videos of farmers in the Midwest who have made legal changes. (We were also able to leverage additional funds to create three additional videos of Northeast farmers also making legal changes.)
    2. We began outreach on the videos in November of 2015 and continue utilizing them in workshops, webinars, and general outreach into 2016.

Host workshops and webinars

1. Schedule and coordinate logistics for 8 workshops and 1 webinar: Completed in 2015
   2015. All workshops and webinars were scheduled as of the end of 2015.
2. Reserve facilities for workshops: Completed in 2015
   1. We put all the logistics in place for our workshops and webinars.
3. Conduct outreach campaigns on workshops: Ongoing into 2016.
   1. We began outreach on webinars and workshops in 2014, and the process will continue right up to the end of the grant project as our recorded webinars are always available to view.
4. Create interactive workshop/webinar curricula: Completed in 2015
   2015. Our curricula was complete in 2015.
5. Deliver workshops and webinars: Partially Completed in 2015
   2016. We hosted three webinars and three workshops in 2015, with 4 more workshops for 2016.
6. Send post-event survey and revise as needed: Ongoing into 2016
   1. We surveyed individuals for the 2015 workshops and webinars, but continue to 2016 events
7. Disseminate curricula: Not Completed
   1. As with reaching an Iowa attorney, turning our materials into curricula for other farm educators has proved to be a bit too much for the project. We created some incredible resources and curricula but the process has been more exhaustive than we anticipated. Even with extending the project, this tail-end objective won’t be met by the conclusion of the grant period. 
8. Send follow up survey: Ongoing into 2016
   1. Follow up surveys have been sent for 2015, but will continue until the grant period ends.

Deliver Legal Services

1. Develop computer infrastructure for referrals and attorney collaboration: Completed
   1. We have a basic system in place to manage this.
2. Establish fee structure: Revised and completed in 2015
   1. Our approach in this area has evolved since writing this application. Rather than set out a “fee structure” that partners have to adhere to, we have focused on reducing costs overall through standardized forms. Our progress developing these forms is moving along nicely.
   2. In 2015, we continued on our approach to reduce costs by enabling farmers to complete as much of the work ahead of time as possible. We drafted checklists of questions farmers should answer about their legal document and desired outcomes before meeting with an attorney. We developed extensively annotated forms that enable farmers to modify a template for their unique situation. These checklists and forms are then taken to an attorney for an efficient review.
3. Recruit 4 attorneys: Completed in 2015
   1. We were able to recruit attorneys in Minnesota, Wisconsin and Illinois to refer farmers to, where we could not assist ourselves. Iowa remains outstanding and we likely will not be able to connect with an attorney for the purposes of this program in Iowa by the end of the grant term.

Accomplishments/Milestones

Below, I have detailed our accomplishments and milestones related to the educational materials aspect of our project. I have left the 2014 reports in this report for continuity and followed them with the 2015 accomplishments. In 2014, we detailed accomplishments from the legal services aspect of this project. We did not do anything further on that aspect of the project in 2015, as it was designed to inform the development of the educational resources.

Create and Distribute Educational Materials

1. We started our SARE project with a list of 9 detailed and difficult legal questions to research and resolve through this project. At the end of 2014, we had worked through each of them. In the process, we wrote 11 detailed legal memos that are the basis for the farmer guides we are drafting now. We also created 4 model legal documents for farmers: an LLC operating agreement, S Corporation bylaws and shareholder agreement, a land contract, and a promissory note. These are currently in review. We have created a detailed, exhaustive flowchart to choosing a farm business entity that spans 4 pages and is very easy to use. Several other diagrams and graphic illustrations are also in production.
   1. In 2015, we faced the task of turning our huge quantity of legal research into a cohesive, approachable resource for farmers. We drafted detailed chapters on each entity option available to farmers and then combined these chapters into a single “Farmers Guide to Business Entities,” which reached 325 pages in length.
   2. Our extensive research on farm financing resulted in two separate resources, one on land contracts and one on promissory notes. Both guides explore the issue in detail using our text, checklist, and model document approach, with stories throughout to illustrate the legal principles.
2. Our initial survey was sent to 200 farmers and we received 60 responses, which is quite good. Results were very informative and shaped how we researched the above issues and continue to define the educational guides we are drafting.
   2015. No further work was done on this in 2015.
3. We registered 180 people for our webinar on business entities, which is our second most-popular webinar out of the 14 we are hosting this winter. Engagement during the webinar was very high with the majority of attendees indicating that they planning to implement one of our recommended risk management strategies after the webinar.
   1. In 2015, we hosted three more webinars which were all recorded and distributed on an ongoing basis. As of the time of writing (January 2016), we had reached about 573 farmers with our live and recorded webinars.
4. We distributed a new chart organizing the characteristics of the most popular farm business entities and 62 farmers downloaded it in the first week.
   1. In 2015, we had launched all our print materials for this project- the business entities guide, land contracts guide, and promissory notes guide. As of the time of writing (January 2016), about 955 people had downloaded our resources.
5. 150 farmers attended our first workshop and informal feedback has been very positive, thus far.
   1. By the end of 2015, we had completed two more workshops with total attendance at about 30 farmers.
6. We finished filming and rough edits on our 3 midwestern farmer videos. By the end of 2015, our videos were final and we had begun our outreach campaigns, using them to recruit farmers to our workshops and our print resources.
7. In 2015, we turned our webinar materials into a podcast format and began distribution to farmers over the summer. This has proved to be a powerful vehicle for reaching our audience. Farmers can listen while doing their work. We have reached a couple hundred additional farmers through this mechanism.

Impacts and Contributions/Outcomes

Reporting outcomes and impacts for 2015 itself is a bit awkward with our project timeline. Like so many farmer education organizations, the bulk of our work on education occurs from November to March. Evaluations lag a bit behind that schedule, with most of our outcomes being processed by May. In our 2014 report, we jumped ahead a bit to report on outcomes achieved in early 2015. That puts us in a strange situation for the report on 2015. We don’t want to report on early 2016’s results this time because we are in the middle of a much bigger evaluation strategy. Initially, it looks like about 58% of our users took action as a result of our resources. 41% of users had already adopted a new business entity or modified their organizing documents within a month’s time. A similar percentage of users had created a plan to change their entity or revise their documents by the time of the survey. We’d like to save additional hard reporting on hard numbers relating to our outcomes for our Final Report.  For this report, we are offering stories and anecdotes about outcomes achieved over 2015.

During our Illinois workshop, we helped 15 farmers work through the details of choosing a business entity. One farmer had hoped to form a nonprofit organization to host a bee sanctuary alongside a for-profit honey enterprise. We helped that farmer understand the detailed paperwork and accounting procedures that would be necessary to run two parallel operations. In addition, we talked through the issues that might flag further investigation from the IRS when a nonprofit and for-profit work in concert. By the end of the session, he’d made a clear decision that the nonprofit sanctuary would require much more community-based development to be a viable project.

Through our workshops, we helped a woman who ran a church-directed farmer development program with a CSA sales component. The nonprofit director was unable to get good information about the church’s basic legal obligations to the farm from within. Through our workshop, she learned the legal background behind their structure. This was very valuable to her because she was in the process of planning the farm program’s 10-year vision. As a result of our workshop, she was able to articulate a vision that would not offend the IRS under their current structure.

Another workshop attendee was experiencing a problem that plagues so many farm families- interpersonal discord about how the farm business should be operated and transferred. She was despirate to understand how an operating agreement can help make familial obligations transparent and structured. Through our workshop, she explored operating agreements in detail. Also, she had the chance to talk with other farmers about conflict-reduction tactics that had worked on her operation. After the event she said, “This is the first time in 200 years of existence that my family has held an operating agreement in our hands.” Her story illustrates how powerful simply having a basic document to move forward from can be for a family.

Collaborators: