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|OEDC faces hurdles, questions in transition phase|
Ouachita Economic Development Corp.'s transition toward becoming part of a new regional economic development organization is moving forward slowly in spite of nagging questions about how best to handle giving over the reigns to the group.
Linda Holyfield, OEDC board member and transition team chairperson, said OEDC is focused on helping the new group raise money by providing staff support and a bank account into which the yet-to-be-named regional economic development group can deposit donations.
Also, Holyfield said a transition committee is working with accountants and lawyers to determine how best to move forward in establishing the new group as a non-profit corporation.
"We're using people with the expertise to let us know what we can and cannot do," Holyfield said.
Though OEDC is considering whether it will be best to establish a new non-profit corporation under a new name or simply re-charter OEDC with a new name and new bylaws, at least one option is off the table.
Previously, Holyfield said OEDC was considering some sort of transfer of OEDC's existing non-profit status to the regional group.
However, mention of such a transfer raised legal questions over whether it would be possible to transfer articles of non-profit incorporation from one entity to another.
That's where the Internal Revenue Service comes into play.
According to IRS spokesman Mike Dobzinski, IRS regulations do not allow a non-profit corporation to transfer its non-profit status to another entity that has plans to establish itself as a non-profit.
"An organization that is a new entity under state law must separately file an application to be recognized by the IRS as tax exempt," Dobzinski said.
That means the new regional organization would have to petition for its own 501(c)3 or non-profit designation within 27 months of incorporation.
If the IRS grants a petition for a non-profit status, or a 501(c)3, the status is retroactive to the date of incorporation, Dobzinski said.
Until the status is granted, donations made to entities that have not been designated 501(c)3 non-profits are not tax deductable and donors cannot be guaranteed their donations will be tax deductable.
"If tax exempt status is denied, the donation will not be deductible," Dobzinski said.
While IRS guidelines have eliminated one possible path to the transition, Holyfield said OEDC still has options to facilitate the new group's assumption of OEDC's assets, including its 501(c)3 status.
One option would entail OEDC renaming itself, draft a new charter and adopt a new set of bylaws.
That's an option Holyfield said she knows will work because OEDC drafted new bylaws and a new charter several years ago when the organization restructured itself and changed its name from the Ouachita Enterprise Corp. to Ouachita Economic Development Corp.
Before that can happen, however, the new regional authority must take steps for OEDC to hand over the reigns.
"They've got to write the bylaws and articles for that organization," Holyfield said. "We can't do that for them and that takes a little bit of time."