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How a Vermont Fly-Fishing Museum's Lawsuit Changed the Definition of a Nonprofit

Katie Jickling Jul 18, 2018 10:00 AM
Katie Jickling
American Museum of Fly Fishing

Charles Orvis founded his fly-fishing company in Manchester 162 years ago and quickly built its reputation as a high-quality outdoor outfitter.

Today the Orvis Company remains a privately held business but has expanded to include an extensive online catalog and 69 retail stores and 10 outlets that also sell apparel and dog beds. Its products are still geared to a moneyed clientele; Orvis offers certain rods online for $898 — reel not included — and gets coverage from Forbes.

Along the way, the growing company's leaders helped start the American Museum of Fly Fishing. The discovery of fishing artifacts in the Manchester Orvis store's attic prompted its founding in 1968. The collection remained in the store until the museum's board bought a nearby building in 1983, and the town then assessed it for taxes. The museum sued, arguing that it was a tax-exempt nonprofit — setting off a legal battle that went all the way to the Vermont Supreme Court.

The court's 1989 ruling favored the museum over the town and set a new standard to determine which organizations are exempt from property taxes in Vermont.

Prior to that, only entities that performed an "essential government function" got the break. After the decision, there was a multipart test: Organizations had to be open for public use, benefit society and operate as a nonprofit in order to avoid paying property taxes.

"It was a major change in the way they treated tax-exempt public property," Montpelier attorney and historian Paul Gillies said of the state government.

That enabled more Vermont nonprofits to get off the property tax rolls, shifting the burden to other taxpayers, said attorney Jim Knapp, Vermont's former interim director of property valuation and review. The change also allowed small nonprofits with property to survive, he added.

Today, the American Museum of Fly Fishing shares a parking lot with Orvis' flagship store. It's outside downtown Manchester, by the Orvis fly rod factory and the company's Fly Fishing School. The Orvis outlet store, which sells discounted items, is just down the road.

The nonprofit museum, which claims to display the world's largest collection of angling paraphernalia, remains distinct from Orvis, said the museum's executive director, Sarah Foster, adding that the notion the two are linked is a "terrible misconception."

Leigh Perkins, who served as Orvis' CEO from 1965 until his retirement in 1992, was a founding museum board member and still serves on its board with his wife, Annie. The museum gallery, which features a history of the sport, rows of flies in glass cases, and the fly rods owned by Babe Ruth and Dwight Eisenhower, is named for Leigh Perkins.

The museum's proximity to Orvis still gives some people the impression that it's part of the for-profit entity, Gillies said. "In the crowd I run in ... it's shorthand for, 'roll your eyes,'" Gillies said of the museum. "It's just a little close."

Not so, said Rob Oden, vice president of the museum's board. A former president of Kenyon and Carleton colleges, Oden has been fly-fishing since he was 5. He joined the board in 2011.

"I don't think I've heard Orvis mentioned at a board meeting," Oden said.

Oden said publication of the museum's journal, the American Fly Fisher, is one way the museum serves the "public interest." He added that it's the best fly-fishing publication he's ever seen.

In addition to putting out the journal, three full-time and three part-time staff also hold workshops and run free weekly events for kids. In May, the museum celebrated its 50th anniversary with a fundraiser in New York City.

According to its 2015 Internal Revenue Service Form 990, two benefit events and donations from its 42 board members helped cover the museum's $735,000 annual budget. About 1,000 people from around the world pay between $50 and $1,000 a year for a membership. Museum admission is $5.

The organization doesn't pay property taxes on its 5.2 acres of land, which is home to the museum, an office building and a small cattail-fringed pond. The property is assessed at more than $1.1 million and, if not for the nonprofit status, would cost the organization about $21,500 a year in taxes.

That's a lot of rods and reels.