We announced back in January when we filed our 501(c)(3) paperwork, and now have received the first in a series of steps from the IRS to reach our determination. This simple letter is simply the verification they have received and are processing our application. With this letter in hand, we can legitimately state we are a pending 501(c)(3) organization. But with all the confusion in the horse rescue world about who is, and who isn't, and what does it mean, and what does it require, and even organizations either not understanding or lying about their status, we thought we'd share a little bit about our process, what we've done, and what we understand this all to mean. Note: this is not legal advice. We are not lawyers, though we have received our own advice and GSH's Tiffany has paralegal experience. We're just trying to clear up some confusion and share our own story.
These days anyone can put up a Facebook page and call themselves a rescue. It's fast and easy and a great way to get your message out. What's tripping people up is the legal side of things. A lot of people will have the best of intentions, start up a page, intend to file for a 501(c)(3), and because they intend to file state they are a pending 501(c)(3) or worse - assume that somehow the 501(c)(3) is an automatic designation or be completely ignorant of the need to file for and receive this status.. This, however, is simply not the right way to use that designation. Additionally, many states require registration if you are going to collect donations whether you are a private person, incorporation, or whatever. This seems to be a problem point for many people starting out. Simply having a love for animals and wanting to help is not enough when it comes to rescue.
In our history, Kathi Ring of GSH started out privately rescuing small animals - squirrels, raccoons, etc - over 30 years ago. It was nothing organized, it was simply Kathi taking in and caring for an animal and releasing it to the wild. Over the years, that grew to include contacts around the state of Iowa turning to her, and Kathi working with bigger organizations. When required, she worked with the Department of Natural Resources to make sure things were being handled right. But it was private. No donations, no gifts, all just done out of the kindness of Kathi's heart.
Eventually, Kathi returned to her favorite animal, the horse. She had ridden all her life, competed as a teenager, and only gave up horses as an adult when it simply wasn't in the budget or cards. She always found a way to have horses around, and passed that love of horses on to her oldest daughter, Tiffany. Both Kathi and Tiffany would do what they could, though limited, to have horses around, even if it meant simply trail riding while camping- though as a teen, Tiffany would get up every morning on the yearly camping trip to help tack up the trail horses and ride them up to the hitching post and return in the evening to ride them back to the barn and help turn them out. When horses are in your blood, you find any way you can to be around them. Kathi's second daughter, Nina, avoided the bug for most of her childhood, but you can't fight something that is in your blood. Nina attended a private college in Missouri, William Woods University, and it was there that she got bit by the horse bug. By the time Nina started college, Kathi had already started taking in horses privately. The first, GSH0001 Jazz, a beautiful black and white paint named at that time the "widowmaker" after a sleeper buck put her owner in the ICU with permanent brain damage. She was headed to auction when her owner begged Kathi to purchase her to give her a chance. Faced with a "if you don't buy her, let me know so I can pull Coggins so she has a chance at auction." In Iowa at the time, if you brought a horse to auction without a coggins and don't pay the $25 to pull one, the horse is only allowed to be sold to the market pen ... or straight to slaughter. Kathi couldn't say no, and Jazzy became our first horse in several years.
Things just grew from there. Nina adopted a half-blind skinny thoroughbred from another rescue, and Pirate - a half blind barely halterbroke gelding - came along for a trial. Pirate would allow you to tack him up and even get on and ride a bit, but he was still very anxious and scared of the world. Brought on trial to be a potential companion for Jazz and a horse for Kathi's teenage son to ride, it became apparent pretty quickly that he wasn't suitable. At the same time, he grabbed Tiffany's heart, and in a pivotal moment after he'd panicked and dislocated Nina's finger, causing her to tell him he was going back to the horsey orphanage ... Tiffany jumped in and said no way - he's staying. This started it all for real, as Pirate taught us so much about handling horses that have been through rough times and inspired the thought that would grow into GSH.
Nina & Beau, Pirate & Tiffany, on adoption
Time passed. We helped out with the other rescue some - networking, even fostering at one point. We adopted more - Rocky, Tommy, Hottie, Tika. We took in a starving old man who wasn't doing well on a pasture in his mid-twenties, JJ, at Kathi's location. We helped out friends who had to rehome their horses by offering them a lifetime home with us. We started getting phone calls and helping through networking and quietly just doing our thing. At this point, it was all private. No website, no Facebook page, no business, no donations, no gifts. Just us helping horses however we could. We got on Facebook and found some of the east coast programs like Camelot and AC4H and started seeing what was going on in the rescue world. A couple of AC4H horses, Sully and Mona, were donated to GSH. Kathi privately bailed and donated a couple of Camelot horses to people out east. At the same time, we continued our quiet work here in our area, and started building a network of friends and professionals that we developed relationships.
Then, through a transporter, Kathi was given the opportunity to rehome 10 horses. Seven beautiful Tennessee Walking Horses and a couple of other horses that he just didn't want to feed through winter. He was going to take them to auction, but inspired by the broker programs out east, gave Kathi the opportunity to rehome them first. At first we thought this might be a good program, but it very quickly became obvious that a business relationship wasn't going to work - we were just entirely too different in philosophy and personality. Kathi ended up purchasing all the horses on her own credit card, and were luckily able to place them all ... except for Sophia, a young quarter horse, that Kathi fell for. Sophia remains a personal horse for Kathi to this day.
Rounding up the Iowa 41 Morgans
Immediately following this group, the transporter put us in touch with a breeder of beautiful Morgans who had little to no feed, 50+ horses and HAD to downsize. He had a standing offer on the table from a kill buyer for $250/horse, but didn't want them to go to kill. These were lovely, registered and registerable Morgans, basically living a Mustang lifestyle with little to no handling. Originally asked to help with the 10-12 of the babies, we ended up placing 41 Morgans in what is now known as the Iowa 41. It was during this time that we realized that we needed to go bigger. We had to accept donations and reach out to the public, and knew we couldn't do it on our own. The Morgans cost us about $2500-3000 out of pocket costs, even with placing them into homes and the support of the community. At the same time, we were frantically getting our oganizing paperwork together, incorporated in South Dakota on Dec 13, 2010, and committed to actually doing this "rescue thing" as of January 1, 2011.
Now, back to the legal side of things. We incorporated, and this allowed us to call ourselves a "registered non-profit in the State of South Dakota." If you are NOT incorporated as a non-profit, you are a private person doing rescue. This means any gifts you receive are that - gifts - and are subject to the IRS personal income laws and need to be reported on your tax documents if they meet the requirements. But even that isn't necessarily enough. If you live in a state that requires that you be registered to solicit donations or gifts, you need to do that too. This is where a lot of people get messed up. They think that because they are "doing good" they don't need to track the money. But non-profit doesn't mean non-regulated nor does it mean you can't, as a business, make a profit. So we registered, and we intended from day one to be a 501(c)(3). Our Articles of Incorporation were drafted to include the necessary language; our mission and goals were set to comply with Federal regulations while still staying true to our passion and where our heart was. But we held off, basically because we wanted to be sure of how we were doing things and also because setting up the organization and policies and such takes time. We were small, and overwhelmed after the Morgans, and just needed to breathe for a bit.
We clearly stated our status on our website from day one. The statement is still there, though it will be changing to add the "pending 501(c)(3)" status today. We've always had this statement on the donations page and/or the footer of our website since incorporating in 2010 - Gentle Spirit Horses is not currently a non-profit organization under the IRS rules section 501(c)(3), so donations are not tax deductible. We are a registered non-profit corporation in the state of South Dakota. We are in the process of getting the paperwork done to become a 501(c)(3). Contributions or gifts to Gentle Spirit Horses Rescue & Sanctuary are not tax deductible as charitable contributions for Federal income tax purposes. However, they may be tax deductible under other provisions of the Internal Revenue Code.
This is where it seems so many are falling down. "Pending 501(c)(3)" does not mean that you are one day going to apply - it means you have applied and the IRS is processing your application. Getting an Employee Identification Number does not mean you are a 501(c)(3) - it is a simple phone call and anyone can get one. You need it to start a business checking account, and we've had one since we incorporated as well. Claiming you are a 501(c)(3) is illegal, and unethical, and many organizations that are caught doing so don't seem to understand why people question them about it.
Sumner 22 horses shortly after rescue
GSH has always, always intended to be a 501(c)(3). We have a lot of growth and expansion plans. Early 2012 we started the process - then the Sumner IA 22 case hit. 22 neglected horses, 30+ dead on the property - and we got derailed doing what we love, helping horses. This group was hard - walking among dead horses, pulling out the live ones, fighting to save them and find them homes - it was a very difficult and draining process. Every penny we had and a lot of our time and energy went into this case... but again, they all found homes. We did have to euthanize one filly after her x-rays showed a completely shattered hock that while fused and healed over was causing her great pain to even walk; and a mare from this group was lost after hitting a tree and shattering her shoulder. Her body was donated to Iowa State University so the students could study the effects of long-term starvation - her swiss cheese bones, damage to her organs, etc - so even though it was a tragic loss she did some good. This put us behind several months ... but we were still always planning on filing.
The end of 2012 it became apparent we needed to file sooner rather than later. We were approached by people wanting to make larger donations but needing the tax deduction. We were contacted about grants - but also, need the 501(c)(3). But ... remember that half blind, terrified Mustang we talked about earlier, who inspired GSH and became Tiffany's heart horse? Tragedy struck and we found him dead in pasture in late 2012. We readily admit this derailed a lot of our plans. Tiffany is the planner, the paperwork person ... and Pirate's loss made it hard to even work with the horses we had. 2013 was a tough year, and really it's only been in the last few months that Tiffany has been able to focus and put her heart back out there enough to move things forward again. 2013 wasn't a bad year. We still helped a group of Saddlebred mares donated to our rescue to avoid auction. We took in Sammy, who was nearly dead because he couldn't eat due to an infected cheek. We pushed forward, we cared for the horses we had, we worked on gentling and training. But it was a slow year and a quiet year as we recovered from Pirate's loss. Then the end of the year came around and yes, again, we had the same requests. There was no more putting it off - we had to make a decision. If we were going to continue as a rescue, we need to expand. To expand, we need the 501(c)(3). It was time.
Now ... we did miss a deadline of sorts. If you file within 27 months of incorporation, you can get a retroactive 501(c)(3) status to the day you incorporated. Obviously, we did not do that. Even after the 27 months, however, you can apply for retroactive status or you can choose to have a status based on your postmark date of your application. The retroactive status takes longer, and we decided to go with the option of just applying based on our postmark to receive expedited processing. What this means is if we are approved, any donations after mid-January, 2014, will be tax-deductible. We are filing a 990 for this year. We also, at that point, chose to file for 501(c)(4) status for the previous years - which makes you tax-exempt but does not give you the ability to provide tax-deductible receipts for donations. This also means we had to file 990s for those years, which are in process.
So what does all this mean? According to the letter, the IRS now has 2 options - first is to process the application as is, and if they go that route, we should have a determination within 90 days. The second is to process the application but to seek out more information from us. According to the letter, they have 180 days to do that. So we're looking at anywhere from 2-10 months, maybe longer, to receive our determination. Hopefully we submitted enough with our application and they get back to us quickly. And hopefully it is an approval
What it means for you, as a donor, is minimal. If you've donated because of your love of animals, and not for the tax-deduction, as you have for the past three years, not much has changed. We still keep separate books, we still run the rescue as a business and as if we were a 501(c)(3) by following the federal regulations. If we are approved, your donations this year can be tax deductible. If we are not, then they are just like your donations from last year. If you prefer to donate only to a 501(c)(3) rescue, then we welcome your support in sharing our horses, offering advice, visiting, whatever you feel comfortable giving - and hopefully will earn your trust so when the approval comes through you feel comfortable choosing us as an organization to receive your financial support.
Behind the scenes, things are tightening up as we move forward as well. You will see our policies manual that is being rewritten after three years posted online. Our process is changing slightly, as we've learned what's working and what isn't working. We're looking for a larger property and getting involved with larger organizations. We're listed with the SD Animal Industry Board as a point of contact for the sheriffs in our state in seizure cases. We're moving forward with some of the initiatives, such as the Broken Blanket Project, that we've put off until the 501(c)(3) was done. We're increasing the Board of Directors' participation and firming up our goals and budgets. A lot of what is changing should be barely noticable, except that we're posting it all on the website.
We appreciate all the support we've received in the past three years and are optimistic and excited about the future and where GSH is going. We hope you all enjoy it too!