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Posted: February 23, 2010 6:39 p.m.

BOC considers umbrella 501(c)(3) org. to simplify donation process

The Newton County Board of Commissioners are considering the formation of an umbrella 501(c)(3) organization that would oversee all other non-profits related to the county and simplify accounting.

County officials said there could be multiple benefits to forming a single 501(c)(3), which could be called Newton County Non-Profit Services. One key would be to simplify auditing and financial record keeping process. Currently, the county receives money for several non-profit groups, including the Friends of Gaithers and the Miracle League Field. These groups are non-profit groups, but they’re not 501(c)(3)s, so donations to them are not tax deductible.

Because they deal with county-owned properties and the county receives donations for them, the county has to review those groups’ financial documents and perform separate audits for each company. Chairman Kathy Morgan said Tuesday that’s a complicated and expensive process.

By having a 501(c)(3) that was a general county organization, donations could be made to any group, but only one audit would have to take place.

At their retreat, the BOC discussed the possibility of transforming the dysfunctional 501(c)(3) senior services board into this umbrella 501(c)(3).

Donations made to governments, including the county, can be tax-deducted by law; thre is no need for a 501(c)(3). However, many corporations only donate to 501(c)(3)s because that’s how they have historically donated money.

"They (corporations) don’t want to change, and they have the money. I think the 501(c)(3) is regrettable red tape, but it’s necessary if we want the money," County Attorney Tommy Craig said.

In addition to non-profits, having an umbrella would make it easier for corporations to also donate directly to the county departments. District 5 Commissioner Tim Fleming said many people want to donate to departments like animal services, including items like food and medicine, but he said those people also want to deduct those gifts on their taxes.

An umbrella organization could clear up that any confusion about tax-exempt status.

Senior Services

Another reason the umbrella proposal was brought up was recent problems with the organizational structure of the Newton County Senior Services 501(c)(3) and its board of directors.

Senior Services used to be a county department before it was converted to a 501(c)(3) in 2006. District 1 Commissioner Mort Ewing has repeatedly said that, in 2006, he thought the 501(c)(3) was being created simply to allow senior services to receive grants from corporations. He does not approve of the senior services board of directors, which is composed of volunteers appointed by the BOC, having any oversight over county employees or the 501(c)(3)’s budget.

"That’s where we strayed," he said at the county’s retreat, which was held this weekend at Burge Plantation in Mansfield.

Administrative Assistant John Middleton said that before senior services had been turned into a 501(c)(3), the organization had missed out on an approximately $50,000 grant from Phillip Morris. He said the only reason senior services didn’t get the grant was because it wasn’t a 501(c)(3). He said other corporations expressed similar thoughts.

However, senior service’s board of directors has not been functioning according to some members. Last year the senior services chairman and two members resigned, and since that time the board of directors has not met. Ewing and Fleming, each of whose members resigned, have expressed concern over the dysfunction of the board.

Without a full board, senior services was ineligible to receive a $60,000 grant from the United Fund. To attempt to remedy the situation with a temporary fix, the BOC appointed Ewing and Fleming to replace their members, as well as BOC Chairman Kathy Morgan to serve as chairman.

It was later discovered that the 501(c)(3)’s bylaws did not allow a commissioner to serve on the senior services board. On Sunday, the BOC held a special called meeting to rescind those appointments and appoint new members. Again, the appointments are intended to be temporary to allow senior services to receive the United Fund grant. The members will be replaced when the future of the 501(c)(3) board if determined.

Ewing appointed County Clerk Jackie Smith as District 1 representative; Fleming appointed Recreation Commission Director Tommy Hailey as District 5 representative; and former senior services chairman Benny Phillips was reappointed in that same position.

Future Direction

The BOC had a consensus at the retreat to ask the county attorney to look into the legality and possible organization of a umbrella 501(c)(3).

Morgan said each non-profit that fell under the umbrella could have a separate agreement with the county to suit that non-profit’s need. The umbrella board of directors would have much more oversight regarding senior services, which has county employees, as opposed to something like the Miracle League Field project.

District 3 Commissioner Nancy Schulz expressed uncertainty about the 501(c)(3) proposal, because she thought it might be illegal. She said she studied the IRS code and feels that the 501(c)(3) is not the best method.

Schulz said Wednesday she believed a 509(a) type 1 supporting organization would be a better fit. This would operate similarly to a 501(c)(3), but she believes it will be more appropriate.

She’s also concerned about the BOC growing government, so Schulz wants to make sure the umbrella organization would not add more responsibility to the BOC.

"We need to make sure we’re not growing government in a climate where we’re trying to shrink government, but simultaneously we need to make sure our groups are adequately funded," Schulz said.

The county attorney’s office will continue to pursues the umbrella and the BOC will have another work session in the future.

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