Center may lose 501(c)(3) tax-exempt status
| 21 July 2010
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According to the last Tennessee Corporation Annual Report Form filed by Tullahoma Fine Arts Center Executive Director Lucy Hollis, the center has changed its status from a public benefit corporation to a mutual benefit corporation.
The form, filed with the Tennessee Department of State on September 30, 2009, is signed by Hollis, who operates the center with the approval of its board of directors. Hollis also serves as president of the board.
On the center's 990 tax form, also filed in 2009 with the Internal Revenue Service and signed by TFAC Treasurer Brenda Arnold, public support is listed at 98 percent. This qualifies it as a publicly supported organization.
A 1992 annual report signed by Hollis as president, states the center is a public
benefit corporation, as do reports from 2000 to 2008.
Efforts to reach the lawyer representing Hollis and the Tullahoma Fine Arts Center for comment were unsuccessful.
It is unclear whether the center filed a change to the TFAC charter with the state, which is required to make it official. If TFAC has legally changed from public to mutual, it has serious implications for its status as a charitable organization.
An Internal Revenue Service representative said on Wednesday, that if TFAC has changed to a mutual benefit corporation, it will not be a 501(c)(3) organization. This means, according to Tennessee Arts Commission guidelines, the arts center will no longer be eligible to receive grants. Until recently, TAC provided thousands of dollars in grants to the center and was an important source of its annual revenue.
In a June 19, 2009 email to the City of Tullahoma, TAC Executive Director Rich Boyd wrote, "According to our records the Tullahoma Fine Arts Center has been a grantee of the Commission since 1971, receiving funding in a variety of grant categories. Until FY2008 the Tullahoma Fine Arts Center served as a designated agency distributing state dollars in the Arts Build Communities grant category for counties in the South Central Development District."
According to the state's non-profit guidebook, a mutual benefit corporation is
defined as any nonprofit corporation that is not organized for public or charitable purposes, or that is not recognized by the IRS as tax exempt under 501(c)(3).
The center has a dues-paying membership, who, according to TFAC bylaws, are required to meet each November to elect officers and board members. Last year's annual meeting was canceled by Hollis, less than two months after she filed the corporate report.
