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SBC workshop reviews nonprofit status choices and municipal partnership examples for Buy Local campaign
Summary
Organizers discussed tradeoffs between 501(c)(3) and 501(c)(6) status, recommended education-first framing for a 501(c)(3) and noted examples where municipalities or impact fees seeded alliances.
Sustainable Business Council members and a visiting organizer examined the legal and policy options that will shape the Buy Local campaign, including nonprofit tax status, city partnerships and pro-local procurement policies.
Why it matters: the legal form and municipal relationships will affect what the Council can do with member marketing, public policy engagement and fundraising.
Jeff Milton explained the common approaches among affiliates and the tradeoffs: many start as 501(c)(3) organizations focused on education, but some operations that provide direct marketing or member-benefit services later create a 501(c)(6) arm to carry out those functions without jeopardizing charitable status. “The 501(c)(3) status…has minimal impact on your ability to pursue public policy. But where this starts to become an issue is if a significant part of your work is marketing your member businesses with a goal of driving increased business to them, that becomes somewhat dicey as a 501(c)(3),” Milton said.
Workshop participants discussed protective tactics for a 501(c)(3): ensure materials emphasize education and community benefits (for instance, include sustainability tips alongside member coupons), and consider a separate marketing arm if the campaign later takes on paid marketing and group purchasing.
On municipal partnerships, Milton described examples where cities provided seed funding: the Gallatin Valley alliance received $30,000 from the city drawn from big‑box impact fees; Salt Lake‑area groups used large single sponsors to underwrite printed directories. He also urged exploring local pro‑local procurement policies, small‑business liaison positions and simplifying permitting or startup assistance as non‑controversial ways for local government to support small businesses.
SBC board chair Susan Anderson said the council had applied for 501(c)(3) status and that, while early work can be framed as education, the Council should anticipate whether a second organizational arm will be needed if it pursues direct marketing or member benefits that more closely resemble commercial activity.
The steering committee will prepare a short memo outlining the pros and cons of a single 501(c)(3) vs. a dual-arm structure for board discussion and will list municipal contacts (small-business liaison, economic development) to approach about procurement preferences and potential seed funding sources.
