The Board of Supervisors will soon decide whether a faith-based counseling center in Canton is in line for tax-exempt status.

Grace Christian Counseling Center, located next to Canton’s City Hall, 210 East Peace Street, is asking the board to consider the operation a purely charitable organization.

Grace Christian’s Executive Director Walter Frazier appeared last week as a concerned citizen to plead his case on behalf of the organization to the supervisors, who tabled the decision until the next meeting.

At issue is the fact that Grace Christian is not a free clinic. The counseling center has nine employees and charges for counseling services, and although Frazier argued that the fee for seeing a counselor is based on economic need, he admitted that only 25 percent of its patients’ visits are not covered under those patients’ insurance policy.

That means 75 percent of the clients who walk through the door to meet with Grace Christian counselors are making payments comparable to other area counseling centers.

“We file (for a reimbursement) with the companies when (the clients) have coverage,” Frazier said. “When they don’t, we negotiate a rate that they can pay, sometimes reducing that down to almost nothing.”

Frazier added that Grace Christian hosts fundraisers and charity events to help make up the lost revenue from the service price reductions, and that 95 percent of the center’s income goes to pay the counselors which it employs. The organization ends up with a zero balance at the end of every fiscal year, he said. Even though Grace Christian is classified by the Internal Revenue Service as a 501-C3, non-profit entity, that doesn’t necessarily mean it qualifies for tax-exempt status.

Non-profits under that classification automatically enjoy several benefits. They can receive grants from private foundations and the government, provide tax deductions to individual donors, utilize special postage and advertising rates and limited protection from lawsuits for corporate assets.

Not having to pay taxes is another matter, because while all tax-exempt charitable organizations are classified under the tax code as 501-C3, not all 501-C3 organizations are tax exempt.

Under the law, tax exempt organizations must serve one of the following purposes: charity, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, preventing cruelty to animals or children. 

Qualifying organizations include chapters of the Red Cross, Salvation Army or Boys & Girls clubs, churches, schools, alumni associations, parent-teacher associations, nursing homes and charitable hospitals.

Grace Christian could very well fall under that final category, but the law states that income-producing activities not related to the group’s non-profit purpose are limited. The IRS examines that unrelated income and, if it is a large amount, the nonprofit may have to pay taxes and penalties.

According to Grace Christian’s most recent available federal tax filing from 2018, the business more than doubled its revenue from services from the previous year. It reported service revenue of $116,225 in 2017 and $268,160 in 2018. It lists its total revenue for 2018 as $307,685 and its total expenses at $246,129. 

The tax filing says the company started the last fiscal year with $38,036, made a profit of $61,556 and finished the year with a balance of $99,592.

Ultimately, the Board of Supervisors will decide whether to grant the business a tax exemption with an up-or-down vote. Board Attorney Katie Bryant Snell advised supervisors that state law implores elected officials to construe it against tax exemptions.

“What you have to consider is whether it’s a benevolent or charitable organization,” Bryant Snell told supervisors. “Just because it’s a 501 C-3 doesn’t mean it’s charitable or benevolent. That’s a fact-finding determination for the board, and it’s completely discretionary.”

District 5 Supervisor Paul Griffin, who represents the area where Grace Christian is located, offered a motion to table the discussion to the next meeting, saying “I want to defend you because you’re in my district, but I know nothing about this.”

Grace Christian incorporated in 1999, according to records on file with the Secretary of State’s office, and is headquartered in Vicksburg.