Selma Cafe now holds its monthly breakfast fundraisers in the common house dining room at Sunward Cohousing in Scio Township. (Photo courtesy of Lisa Gottlieb.)

According to co-founder Lisa Gottlieb, the IRS approval of Selma’s 501(c)3 application came late last week. Artrain, an Ann Arbor nonprofit that took on fiscal sponsorship of the cafe in early June, will transfer about $43,000 in cash assets back to a Selma Cafe account at University Bank as soon as a new account is set up. That’s likely to happen later this week, Gottlieb wrote in an email to The Chronicle. Artrain will take a 5% fee for their fiscal support in the transition to Selma’s 501(c)3 status.

Selma Cafe began as a weekly breakfast salon in 2009, held on Friday mornings at the home of Gottlieb and Jeff McCabe in Ann Arbor’s Eberwhite neighborhood. Operations were suspended in mid-April of 2013, after the city notified the group that the breakfasts were violating local zoning ordinances. At roughly the same time, Selma’s previous fiscal sponsor – the nonprofit Food System Economic Partnership (FSEP) – froze funds it held on behalf of Selma Cafe, citing violations of a memorandum of understanding between the two entities. FSEP set a May 31 deadline for organizers to find a new fiscal sponsor, or receive a 501(c)3 nonprofit designation from the IRS. Artrain agreed to take on the sponsorship responsibilities, and the IRS expedited Selma’s application for nonprofit status.

The volunteer-supported fundraising breakfasts resumed in June at a new location – in the common house dining room at Sunward Cohousing, 424 Little Lake Drive. The cohousing community is located off of Jackson Road, west of Ann Arbor in Scio Township. The events shifted to a Saturday brunch, and are being held on a less regular basis. A second breakfast was held on Aug. 3, and others are set for Sept. 14, Oct. 12, Nov. 9, Dec. 14, and Jan. 11. All brunches run from 9 a.m. until noon, with suggested donations of $12-$15.

Of the transition, Gottlieb wrote in an email: “The Sunward Cohousing community has been extremely warm and welcoming, and many of the cohousing residents have been volunteering, which is generous of them and really fun. Selma Cafe guests and volunteers are sharing that they love the new digs. It’s a beautiful setting, with a great kitchen and spacious dining room. The first two breakfast events there were successful and everyone had a great time. Everyone is happy that Selma Cafe didn’t miss a beat in getting things going again.”

Selma’s nonprofit board members are Susie Baity, Kyoko Yamamoto, Nathan Lada, Nick Roumel and Jeff McCabe, with Gottlieb serving as board president and operations/general manager. Gottlieb stated that the board is reviewing projects and events it might pursue, in light of its new independence as a nonprofit.

She also addressed previous concerns that had been raised regarding a possible conflict of interest by McCabe. He owns Nifty Hoops, a business that sells kits to make hoop houses to extend the growing season. “Selma Cafe hasn’t purchased any kits from Jeff, ever, and does not intend to do so,” Gottlieb wrote in an email. “All the hoop houses Selma loaned farmers money to purchase happened before Jeff started Nifty Hoops.” Kits that were purchased using Selma loans were bought from a hoop house company in Ohio, she stated.

For additional background, see Chronicle coverage: “Selma Cafe Finds New Fiscal Sponsor: Artrain” and “City Notifies Selma Cafe of Zoning Violation.”

The paperwork is being completed to transfer fiscal sponsorship from the nonprofit Food System Economic Partnership (FSEP) to Artrain, an arts and cultural organization. In a phone interview with The Chronicle, Gottlieb said the new sponsorship by Artrain means that FSEP will release the Selma Cafe funds that had been frozen, including $46,500 from cash donations.

In late March, FSEP had frozen funds it held on behalf of Selma Cafe and had set a May 31 deadline for organizers to find a new fiscal sponsor, or receive a 501(c)3 nonprofit designation from the IRS. If neither of those actions occurred, FSEP could take the Selma assets permanently, under terms of a memorandum of understanding between the two entities. FSEP’s board had decided to end its fiscal sponsorship of Selma Cafe because of what FSEP characterized as significant violations of the MOU’s terms.

At about the same time, Selma Cafe had been notified by the city of Ann Arbor of zoning violations. The violations were related to the location of the weekly breakfasts – in Gottlieb’s home, in the Eberwhite neighborhood on Ann Arbor’s west side. Because of those zoning issues, Selma Cafe suspended operations in mid-April. [For additional background, see Chronicle coverage: "City Notifies Selma Cafe of Zoning Violation."]

This week, Gottlieb said she’s close to securing a new location – or possibly more than one – for Selma Cafe to restart in some form. The basic format of guest chefs and volunteers will remain, with a focus on locally produced food and support for the farming community. But the previous weekly format will be reduced in frequency to once a month – at least initially. The monthly Saturday brunch would last from 9 a.m. until 1 p.m. Gottlieb hopes to hold the first one in late June.

Regarding Selma Cafe’s new fiscal sponsorship, Gottlieb made the connection to Artrain through Mark Braun, a musician known as “Mr. B” who attended high school with Gottlieb in Flint. He suggested approaching Artrain as a possible fiscal sponsor for Selma Cafe. Artrain had recently added “Mr. B’s Joybox Express Mississippi River Ride” to its roster of projects.

In a phone interview on Thursday with The Chronicle, Artrain CEO Deb Polich said the board approved Artrain’s fiscal sponsorship of Selma Cafe at its meeting in early May. She described the sponsorship as a “short-term reality” until Selma Cafe gets its 501(c)3 designation. If that doesn’t happen, then “we’ll work on a longer-term solution,” she said.

Polich reported that Artrain had set up a fiscal sponsorship program a couple of years ago, with a board-approved application process. Creation of the program was prompted by an individual artist who ended up not using it, Polich said.  So Selma Cafe is the first entity to go through the process. It’s not something that Artrain has promoted, she said.

According to FSEP board chair Ginny Trocchio, FSEP’s board approved the transfer of Selma Cafe assets at a board meeting earlier this week.

Gottlieb described Artrain as a better fit than FSEP, because Artrain is not asking for as much control over Selma Cafe’s operations. As a fiscal sponsor, Artrain’s main role will be financial oversight. In addition to the cash funds, Artrain will also be a fiduciary for about $110,000 in additional assets, including CD investments and loan payments related to hoop house kits and equipment.

As for the 501(c)3 application, Gottlieb said the IRS has agreed to give Selma Cafe’s application an expedited review.