As rent on farmland has not kept up with land prices, an influential charitable organization in Grand Forks has sold its farmland and will change how it will earn future income.
The Myra Foundation, which this year will surpass the $10 million mark in donations, has sold all but one section of its land, which originally was donated 80 years ago by philanthropist John Myra. The 5,500 acres of farmland are located west of Grand Forks near Emerado.
The foundation began 80 years ago when John Myra died without an heir. It was set up by Myra before his death for charitable, educational and character-building purposes, and is, according to Myra Foundation President John Botsford, the first private charitable foundation of its kind in North Dakota.
Botsford has served as president of the Myra Foundation for 18 years; his father served as farm manager before him, beginning in 1946.
“(The decision to sell is) a double-edged sword because that appreciation in land value has, on the one hand, killed us, killed our operations,” said Botsford. “On the other hand, if we take it off the table now, we’re capturing all that appreciation. It’s interesting the way it all shakes out.”
Botsford said it may all be for the better.
“The silver lining in all of this is, converting it to cash and investing the assets should enable us to do far greater work than we have been able to do in the past,” Botsford said. “In the long run, number one, we’re going to save it, we’re going to preserve it, and we’re going to be able to do greater things.”
Traditionally, the foundation has made its donations of grant money based on rental income of its farmland to tenant farmers, some of whom have farmed the land for two or three generations.
The Foundation, known as a “non-operating foundation,” is required under federal law to have its assets appraised every five years. It is then mandated by law to donate 5% of its value annually – in this case, the value of the farmland. As the value of the land increased, income from tenant farmers couldn’t keep up with what the foundation was required to donate, which would then cause heavy excise taxes and penalties to be levied against it. In order to remain in operation, the Myra Foundation board decided to sell its land assets and invest the proceeds. That's the move Botsford calls a “double-edged” sword.
When asked if the move will lead to increased donations of grant money, Botsford's reply was simple: “It is.”
The foundation provides grants to a number of entities in Grand Forks County and the region.
“We have been funding somewhere between 55 and 60 501(c)(3) charitable organizations each year,” said Botsford. “It’s everything from the ballet, to the Empire Theater, to the arts, music, scholarships to UND for Grand Forks County seniors in the high schools.”
Another beneficiary of the foundation’s grants has been the Myra Museum. The two often are confused, though they are actually two separate entities.
Violating the intent of the donor – John Myra – weighed heavily on Botsford and board members as they considered options on how to proceed.
“We were cognizant of that and very careful with that decision,” Botsford said. “This was the only viable option.”
The foundation brought in extra legal counsel to re-read Myra’s will.
“That gave us a lot of comfort, because it clearly said … he had provided for sale of the assets, apparently realizing that holding them in land may not work in perpetuity,” said Botsford. “It clearly provided for it.”
He added that Myra had the foresight to not only set up the foundation, but also the understanding that holding the assets in the form of land may not be the end-all.
Botsford said the foundation is as lean as possible, without staff, office space or overhead. He added that he volunteers all his efforts pro-bono, and does his work out of his home office.
A meeting of all the farm operators was called in June, and the first opportunity to buy the land was given to the farmers who currently rent the land. A second meeting was held in August, again with the tenants but also open to the public.
“Amazingly, today, we have one section left,” said Botsford, who said the land sales went well.