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Officials with the Eastside Community Center will meet with United Way of Bartholomew County’s board today in a bid to show their organization can be trusted with grants from the agency in the wake of tax liens filed by the Internal Revenue Service.
United Way officials stripped the neighborhood community center — run by executive director Priscilla Scalf and a nine-member board — of its certification earlier this year and later learned that Eastside owed the IRS about $60,000 in unpaid payroll taxes dating to 2011 and 2012.
“They’ll have to present us a very, very good case” to regain certification and apply for United Way funding again, said Mark Stewart, president of United Way in Bartholomew County. “They’re getting us financial information, but they don’t seem to have the sense of urgency we’d like.”
A meeting that was supposed to occur last week was canceled because of bad weather, Stewart said. Today’s meeting is at 8:30 a.m.
Angela Shafer, vice chairwoman of the Eastside board of directors and president of Harrison College’s campus in Columbus, said she plans to attend today’s meeting along with Scalf. But the group’s board chairman, John Roberts of Ivy Tech, is out of town and won’t be able to attend, she said.
Scalf declined to comment in advance of today’s meeting.
United Way officials said potential problems with Eastside’s finances came to their attention in early April when a volunteer finance professional reviewing the community center’s materials “noticed warning flags that there may be some issues,” Stewart said.
Later that month, Roger Lang of United Way’s Agency Development Committee met with Scalf and Eastside’s treasurer in an attempt to clear up financial concerns.
But by May 22, United Way instead stripped the community center of certification and told the agency there still were deep concerns to address.
Stewart said United Way didn’t fully understand the IRS problems that Eastside faced at that point, offered the nonprofit some technical advice and helped line up a third-party consultant to aid in financial planning going forward. United Way also consulted with Eastside on focusing its mission.
But on Sept. 13, United Way received a letter from the IRS detailing the “magnitude of the issue,” Stewart said, and that led to a formal United Way request for more financial information from Eastside officials.
United Way believes Eastside’s problems were at least partially linked to the community center’s decision to make additional hires in anticipation of a larger government grant for mortgage and foreclosure counseling than actually materialized.
Stewart said it remains to be seen how much of United Way’s remaining concerns are answered at today’s meeting. Typically, United Way would review an agency’s financial statements, two-year budget, Form 990 tax returns and other key materials.
“We intend to be very thorough. They have a steep hill to climb,” Stewart said. “After the meeting, we probably will have requests for further information.”
Earlier this fall, Scalf told The Republic that Eastside has set up a payment plan with the IRS to settle its debts, and the agency “is using no program money” to pay the back taxes.
In recent months, Eastside decided to outsource its bookkeeping to third-party consultants Mission Management in Columbus, which provides business services to several local nonprofit agencies. A representative of Mission Management also will attend the meeting with United Way today.
Other United Way board members say it’s rare for any nonprofit to lose certification because of financial or other serious concerns, although it has happened a few times. Often, United Way works closely with an agency to address financial or governance problems and then resumes funding when the potential grant recipient finds its footing again.
Stewart said the lingering issues with Eastside amount to the worst case he’s had to deal with since taking over as president of United Way in the county a year-and-a-half ago.
Lang, an ex-Cummins executive active with United Way, said the clock is ticking for 2014 United Way funding, and it’s highly unlikely — though not impossible — that Eastside will be allowed to apply for new money. This year, Eastside got a $36,000 United Way grant, which amounted to about 14 percent of its $250,000 annual budget.
Certification packets for 2015 funding will be sent out in February. Certification decisions will be made in late April. Funding decisions for 2015 will be made in September 2014.
Eastside’s primary role as a community center is to work with neighborhood residents on financial self-sufficiency, and in recent years that has included home foreclosure counseling.
A check of Bartholomew County court records also show 16 incidents of state tax liens totaling $7,320 filed against the community center from January 2002 until July this year. In most cases, those bills ranging from $23.86 to $857.31 were settled in a few days or weeks, but some cases lingered for six months to a year, court records show.
Lang said state withholding tax problems could have been a matter of discrepancies in accounts payable or poor timing in paying bills, but the nonprofit’s IRS woes seem far more serious.
“Not paying legal obligations is not a good place to be,” added small-business owner and United Way incoming board chairman Rich Gold.
Jason Hatton, assistant director of the Bartholomew County Public Library and chairman of United Way’s Community Impact Committee, said he still has concerns about how Eastside is governed.
“We’d want to make sure this won’t happen again,” he said.
If United Way considers renewing grants for Eastside at some point, the community center’s board chairman and executive director also will have to sign a statement swearing there are no more liens affecting financial stability, United Way officials said.
Stewart said United Way would want to “make absolutely sure” that Eastside doesn’t divert any future United Way grants from services in the neighborhood to pay its IRS debts.
“We’d rather not be dealing with this sort of situation in the first place,” Stewart said. “We’d like to put it behind us one way or the other.”
Hatton said United Way board members consider the flap with Eastside a matter of trust.
“This is certainly not a witch hunt, but we have to make sure we can have faith in the agencies we deal with and that they come up to a standard we can believe in,” Hatton said.
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