United Way Suspends REACH Funding

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The United Way of Rutherford and Cannon Counties is suspending contributions to the Cannon County REACH Afterschool Program, beginning July 1.

Brian Hercules, president and CEO of the local United Way, said the agency is taking the action because it learned that REACH recently lost its Internal Revenue Service tax-exempt status.

Linda Bedwell, REACH director, said Friday that she was not aware the program had lost its tax-exempt status until she heard the information from the United Way Thursday.

According to Bedwell and Hercules, the REACH program’s 501(c)3 was under an organization called the Child Protection Council of Cannon County. A 501(c)3 is a nonprofit organization exempt from federal income taxes.

Bedwell said the decision to have REACH listed under the Child Protection Council of Cannon County was made several years ago by former director Angela King, who left the program last fall. Bedwell said she did not know why REACH’s tax-exempt status was set up that way because that decision preceded her time with the program.

IRS records list the address for the Child Protection Council as 612 Lehman St., Woodbury, which is also the address for REACH.

Bedwell said she is working with the United Way to have its tax-exempt status restored. According to Hercules, REACH can not accept or solicit charitable donations without a 501(c)3.

REACH received $18,400 from the United Way during the current fiscal year and was recently allocated $22,000 for FY2011-12.

Hercules said the reason REACH lost its tax-exempt status is because the program had not filed a tax return for the last three years. The Internal Revenue Service announced last week that approximately 275,000 organizations nationwide under the law have automatically lost their tax-exempt status because they did not file legally required annual reports for three consecutive years. For Tennessee, there were 4,473 organizations on the list.

The IRS believes the vast majority of these organizations are defunct, but it also announced special steps to help any existing organizations to apply for reinstatement of their tax-exempt status.

Hercules said the United Way would hold funds allocated for REACH in reserve until the program receives a 501(c)3. Bedwell said REACH would be applying for tax-exempt status under its own name.

“We can’t fund them (REACH) as a 501(c)3 until they give us an action plan,” Hercules said. “We are not de-funding them, we are just putting money on hold until the situation is worked out.”

The United Way president said the agency will do everything it can to help REACH fix the problem.

“We are very supportive of the REACH program. We think they do a very good job helping the children of Cannon County,” Hercules said.

Cannon County Executive Mike Gannon said were REACH not to regain its tax-exempt status, the program would have to cut at least $22,000 in services during the upcoming fiscal year. He also noted that if not having a 501(c)3 means REACH can not accept donations or grant money, it is likely the program would come to an end.

Other Cannon County organizations on the list of those who had their tax-exempt status revoked are Cannon County Animal Humane Society, Dairy Herd Improvement Association, Cannon County Rural Area, Leoni Cemetery Trust Fund, Inc., Pleasant View Cemetery General Fund, Cannon County Health Services and Green Room Projects.

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