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Not for Profit Organization Under Indiana Law

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					DATE:           June 8, 2007

TO:             All Local Health Departments and other Interested Parties

FROM:           A. Scott Gilliam, MBA, CFSP
                Manager, Food Protection Program

SUBJECT:        Guidance for Changes to Definition of “Food Establishment”
                Senate Enrolled Act 190


PURPOSE

This document is to assist Indiana local health departments (LHD) and other food regulatory agencies in
the uniform use of the definition of “Food Establishment” as redefined in Senate Enrolled Act 190 (SEA
190). SEA 190 of the 2007 Indiana General Assembly changed the definition of the term “food
establishment” found in Indiana Code (IC) 16-18-2-137, which affects how it is used in IC 16-42-5 (Food
Establishment Act), and IC 16-42-5.2 (Food Handler Certification Act).

BACKGROUND

IC16-42-5 provides the Indiana State Department of Health (ISDH) authority to promulgate rules to
regulate food establishments. IC 16-42-5.2 requires food handlers to be certified and provides ISDH the
authority to promulgate rules to administer the law.

SEA 190 did two important things:
    1. It added a subsection to the definition of food establishment to describe what is not included as a
         food establishment and references the Internal Revenue Service 501 not-for-profit law rather than
         the Indiana Department of Revenue exemption law; and
    2. It repealed IC 16-42-5-4, which stated provisions concerning not-for-profit organizations and
         when they were exempt from regulation. .
Previously, the language used described the criteria by which a food establishment was exempt from
regulations. Now the language determines whether or not an operation meets the definition of a food
establishment.

DISCUSSION

SEA 190 redefines IC 16-18-2-137 and adds a variety of events and operations that were formerly
addressed by IC 16-42-5 and considered to be food establishments. SEA 190 clarifies what is not a food
establishment as follows:

1.      A dwelling where food is prepared on the premises by the occupants, free of charge, for
        their consumption or for consumption by their guests
        Example: A private home used for personal living.
2.   A gathering of individuals at a venue of an organization that is organized for educational
     purposes in a nonpublic educational setting or for religious purposes, if:
     (A) the individuals separately or jointly provide or prepare, free of charge, and consume
     their own food or that of others attending the gathering; and
     (B) the gathering is for a purpose of the organization.
     Gatherings for the purpose of the organization include funerals, wedding receptions,
     christenings, bar or bat mitzvahs, baptisms, communions, and other events or celebrations
     sponsored by the organization.

     Examples of nonpublic educational purposes would include parochial schools and private
     universities that have pitch-ins, private parties, or any other event that benefits the school or
     university.

     Examples of religious purposes would include churches that have ceremonies and private events
     that benefit the organization and its members such as funeral dinners, pitch-ins, wedding
     receptions, communions and other similar types of events.
     Note: If the organization operates a restaurant, such as a soup kitchen to feed the needy in an
     ongoing manner, then this part of the organization would be a food establishment subject to
     inspection.

3.   Vehicles used to transport food to the needy for free or for a nominal donation.

     Examples are Meals on Wheels, Salvation Army, Red Cross or church members delivering meals
     to the needy or homeless.

4.   A private gathering of individuals who separately or jointly provide or prepare and
     consume their own food or that of others attending the gathering, regardless of whether the
     gathering is held on public or private property.

     Examples are family reunions, private parties, wedding receptions, funeral dinners, wakes and
     open houses.

5.   Except for food prepared by a for-profit entity, a venue of the sale of food prepared for the
     organization:
     (A) that is organized for:
         (i) religious purposes; or
         (ii) educational purposes in a nonpublic educational setting;
     (B) that is exempt from taxation under Section 501 of the Internal Revenue Code;
         and
     (C) that offers the food for sale to the final consumer at an event held for the benefit
         of the organization;
     unless the food is being provided in a restaurant or a cafeteria with an extensive menu of
     prepared foods.

     Examples of nonpublic educational organizations would include parochial/private schools and
     private universities that have concession stands, bake sales, popcorn sales or any other event that
     benefits the school or university.
        Examples of religious purposes would include churches that have ceremonies and private events
        that benefit the organization and its members, such as bake sales, chili and spaghetti dinners,
        pizza fund raisers and popcorn sales.
        Note: If these organizations contract with a “for-profit entity” to prepare the food for their event
        or prepare the food in the school cafeteria, the “for-profit entity” and the school cafeteria is not
        exempt and is subject to inspection.

6.      Except for food prepared by a for-profit entity, an Indiana nonprofit organization that:
        (A) is organized for civic, fraternal, veterans, or charitable purposes;
        (B) is exempt from taxation under Section 501 of the Internal Revenue Code; and
        (C) offers food for sale to the final consumer at an event held for the benefit of the
        organization;
        if the events conducted by the organization take place for not more than fifteen (15) days in
        a calendar year.

        Examples are bake sales; chili, spaghetti, steak and pork chop dinners; fish fries; pizza fund
        raisers; and popcorn sales that are operated by Indiana non-profit organizations. These
        organizations are allowed to conduct these activities up to fifteen (15) calendar days per year.
        This has been reduced from the former allowance of thirty (30) calendar days per year.
        Note: If these organizations contract with a “for-profit entity” to prepare the food for their event,
        the “for-profit entity” is a food establishment and subject to inspection

This legislation determines whether or not the not-for-profit organization is a food establishment rather
than whether or not it is an exempt entity. In addition, SEA 190 repealed the exemption and waiver
option by the organization, Once it is determined that the operation is or is not a food establishment, a
decision can be made, as to whether or not it is subject to inspection and if a certified food handler is
required, based on the menu served.

CONCLUSION

SEA 190 dramatically changed the former exemption and now is much easier to understand. In most
cases many of these organizations, events, facilities and homes were not being regulated by the health
department anyway. SEA 190 clarifies what, in most cases, was already being done. SEA 190 does
require school cafeterias with extensive menus (private or religious) to be subject to inspection since they
would be considered food establishments. Furthermore, it is no longer possible for those entities desiring
to be regulated to waive their right to exemption. Those entities not considered to be food establishments
are not subject to any additional requirements, such as registering as an exempt entity with the local
health department. These kinds of activities are a form of regulation that can not be applied to these
entities. SEA 190 goes into effect on July 1, 2007.

If you have questions regarding this topic or this document, please contact the Food Protection Program at
317-233-7360 or your area Food Protection Program representative.
                              SENATE ENROLLED ACT No. 190


  SECTION 1. IC 16-18-2-137 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1,
2007]:

Sec. 137. (a) "Food establishment", for purposes of IC 16-42-5 and IC 16-42-5.2, means any
building, room, basement, vehicle of transportation, cellar, or open or enclosed area occupied or
used for handling food.
   (b) The term does not include the following:
     (1) A dwelling where food is prepared on the premises by the occupants, free of
charge, for their consumption or for consumption by their guests.
     (2) A gathering of individuals at a venue of an organization that is organized for
educational purposes in a nonpublic educational setting or for religious purposes, if:
        (A) the individuals separately or jointly provide or prepare, free of charge, and
consume their own food or that of others attending the gathering; and
        (B) the gathering is for a purpose of the organization.
     Gatherings for the purpose of the organization include funerals, wedding receptions,
christenings, bar or bat mitzvahs, baptisms, communions, and other events or celebrations
sponsored by the organization.
     (3) A vehicle used to transport food solely for distribution to the needy, either free of
charge or for a nominal donation.
     (4) A private gathering of individuals who separately or jointly provide or prepare and
consume their own food or that of others attending the gathering, regardless of whether the
gathering is held on public or private property.
     (5) Except for food prepared by a for-profit entity, a venue of the sale of food prepared
for the organization:
        (A) that is organized for:
           (i) religious purposes; or
           (ii) educational purposes in a nonpublic educational setting;
        (B) that is exempt from taxation under Section 501 of the Internal Revenue Code;
and
        (C) that offers the food for sale to the final consumer at an event held for the benefit
of the organization;
     unless the food is being provided in a restaurant or a cafeteria with an extensive menu
of prepared foods.
     (6) Except for food prepared by a for-profit entity, an Indiana nonprofit organization
that:
        (A) is organized for civic, fraternal, veterans, or charitable purposes;
        (B) is exempt from taxation under Section 501 of the Internal Revenue Code; and
        (C) offers food for sale to the final consumer at an event held for the benefit of the
organization;
     if the events conducted by the organization take place for not more than fifteen (15)
days in a calendar year.

SOURCE: IC 16-42-5-4; (07)SE0190.1.2. -->       SECTION 2. IC 16-42-5-4 IS REPEALED
[EFFECTIVE JULY 1, 2007].

				
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