Finance and Structure Working Group Report

FINANCE AND STRUCTURE WORKING GROUP

REPORT ON NEXT STEPS FOR MEETING 20 November 2011

1. Initial Association requirements

It is proposed that the first step, no matter what the final structure is to be, should be to incorporate the management organisation for the City Farm. This provides a formal structure which is flexible, but provides a separate entity to which individuals sign up to and commit to its aims and objectives and pay a membership fee. It also makes a separate entity for financial and accountability purposes eg bank accounts, contracting etc. This requires the least cost and formality compared to any other option, and these are:
 * A name;
 * At least an acceptable draft set of objects and purposes
 * A set of rules: easiest path is to use the model rules attached to the Regulations, and then modify them once any short-comings become apparent;
 * A group of at least 5 people to form the inaugural committee members and a public officer who resides in the ACT; and
 * Currently $151 to lodge the application to incorporate- the so-called prescribed fee.

2. How do you incorporate an Association?

The following extract from the office of Regulatory Services Website outlines the process:
 * the proposed name of the association;
 * the name and address of the applicant;
 * the name and address of the inaugural public officer;
 * the names and addresses of all inaugural committee members;
 * the address and opening hours of the association’s registered office if any;
 * the association's intended objects and purposes;
 * whether the name has been previously reserved;
 * whether or not the model rules are to apply to the association, otherwise a copy of the rules must be attached to the application; and,
 * whether any deeds or trusts apply to the association, in which case a copy of the deed or other instrument must be attached to the application.

A copy of the Application is available for download from the ACT Legislation website at http://www.legislation.act.gov.au/af/2011-151/current/pdf/2011-151.pdf and could be completed once the initial requirements for incorporation listed in section1 above are completed or available.

3. Some further initial questions

These are set out in the paper below, entitled The City Farm: Structure and Activities – some thoughts, prepared by Fiona Tito Wheatland for the Working Group.

Introduction – links between structure and activities
At the October meeting, the general consensus appeared to be that people wanted the City Farm to be independent of Government funding if possible. There are a number of options: The structure of the governing body in the end will need to be arranged to fit with the way the farm would operate at a particular time. For example, it may start out as an incorporated association, which will provide some formal structure, but once it is past its preliminary stage and people may be looking to build businesses or employment arrangements in conjunction with the Farm, a more business oriented structure may be required.
 * Generating an income from selling goods or services associated with the farm activities eg selling produce, running a café, raising and selling seedlings; selling rare breed chicks or ducklings;
 * Payments by members/shareholders eg subscriptions, membership fees, capital;
 * Generating an income from teaching or running courses at the farm or other non-farming but associated activities eg selling worm castings, organic gardening advice;
 * Accepting loans which can be serviced from other income or receiving donations or legacies eg for specific capital works.

A Preliminary Question – Profit or Not for profit
The question of whether the City Farm will operate as a profit-making organisation or as a non-profit really depends on the focus. For example:
 * If its main purpose is education, rather than commercial farming, then a non-profit structure might be appropriate – the organisation might need ethically to consider how it then interacts with for-profit enterprises in similar areas, so as not to unfairly compete with for-profit growers and sellers (see below).
 * If it will operate as a non-profit, then it may need to look at how to arrange its affairs to facilitate seeking Gift Deductible tax status, so that people can make tax deductable donations to its research and similar functions.
 * If it will operate partly on a for-profit basis and partly as a non-profit, how this can be arranged most appropriately eg management by a non-profit which is an incorporated association with leases of commercial spaces, or ownership of productive assets by a co-operative or a company structure, both of which could involve the City Farm as a member or shareholder.

​Some Commercial Options

If the idea is not to seek government funding, then there will probably need to be some commercial element to the City Farm. Some ideas which have been looked at are listed here:
 * Café from food mainly grown on farm;
 * Market sales several times a week from farm produce;
 * Sales of value added produce eg jams, take-away meals, dried fruit etc
 * Sale of livestock or livestock products eg eggs, milk, meat, wool, offspring, honey
 * Compost production and sale;
 * Worms – for sale or worm casting production;
 * Trades – eg knife sharpening, tool maintenance, home butchering;
 * Educational experiences for children;
 * Courses for adults;
 * Sale of other products associated with the farm eg bee hives, specialised equipment.

Concerns or issues
Once the City Farm seeks to move into areas which may be in competition with commercial sellers (particularly small scale local farmers, sellers and producers) it will need to ensure that it acts ethically in relation to these. Many local producers are not operating on large margins, and it would be important to ensure that the City Farm did not use any non-profit elements to reduce costs and so compete unfairly.

Discussion with some of these producers should start early and be undertaken in a spirit of constructive co-operation – all of these initiatives will be needed to change the world!!