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Finding solid footing – Austin Daily Herald

Finding solid footing

Published 8:00 pm Friday, November 15, 2024

Matchbox Children’s Theatre putting maximum effort toward regaining non-profit status, pay back IRS debt

 

In its most recent years, those behind the Matchbox Children’s Theatre have injected a new spirit into bolstering the theater company’s offerings to young actors and actresses.

However, recent developments, including the loss of its 501(c) 3 non-profit status and owning $70,000 to the Internal Revenue Service, has put MCT into a position where the reality could result in its closure.

In October, in an explainer by MCT Executive Director Angela Sedgwick Perry on MCT’s website, the entire story was laid out for the public in which Perry described the situation and intentions of MCT to regain its 501(c)3 status, repay money owned and firmly establish a future for Matchbox.

“It’s almost as if now we would be able to go back to the plan I began with such a great team on steroids,” Sedgwick Perry said Wednesday morning. “There’s been this revelation and there’s been this great lesson learned. You absolutely use that lesson. Not only will it be run with precision and balance of our people not being overwhelmed, but being more thorough in getting a complete strong board and getting the right point people.”

MCT’s recent woes go back to at least 2016, though Sedgwick Perry acknowledged it could go back even further, however, after 2016 there is no clear trail of where things lead to.

While things go back nearly 10 years, trouble truly came to light the first of this year when in January, MCT hired a financial consultant who specialized in non-profits in an effort to function better. Throughout its many years, Matchbox has at times struggled to attract the right person to act as treasurer.

This later would contribute to the issues MCT is currently facing, but wasn’t known at the time. The financial consultant worked with MCT, and a clearer picture began to emerge reflecting numbers that didn’t line up.

“It was like, ‘oh boy,’” Sedgwick Perry said. “We opened the book wider. How far back does this need to be fixed?”

Sedgwick Perry said Wednesday, as well as on MCT explainer page, that the board began finding out that the story included alleged embezzlement, altered records and forgery by a person who was acting as the group’s treasurer.

However, a lawyer advised not taking legal action because the cost to recoup funds lost would not be enough to balance the cost of pursuit.

“There was reluctance and there was a large gap in time before records were finally turned over,” Sedgwick Perry said. “Once they were, they were strangely altered in a way you could see was grasping in a way to make it line up when nothing lined up. Numbers didn’t make sense and receipts were missing. There was only so much you could do at that point and it was absolutely crushing.”

This point was aggravated by the fact that there was no-one in a position to know enough about the work of a treasurer.

“Years without one consistent person sitting in this seat with one consistent system with proper treasury reports didn’t happen,” Sedgwick Perry said. “And then came COVID.”

The COVID-19 pandemic in 2020 and into 2021 exacerbated the situation. On the surface, the grants the company received put MCT on solid footing through the pandemic, but what the board would learn later is that the grants would lead to another problem.

The substantial grants actually put MCT into a different tax bracket and unbeknown to the Matchbox board, it required a change in filing. For three years, MCT failed to file the correct forms and it was this that led to the 501(c) 3 designation to be stripped from them.

So, as it sits now, Matchbox is faced with two equally challenging issues on two fronts: regaining its non-profit status and repaying the $70,000 owed to the IRS.

“Of course, we are going to the community, going to the people in hopes that they understand the power of what matchbox brings to the community,” Sedgwick Perry said. “We are greatly relying on continuous donations to help us cover what we can’t cut to be able to keep our doors open.”

Matchbox also has available to it money raised from the Second Act Thrift store, which was established in order to support Matchbox on a financially supportive basis. At the same time, though, the company still is facing a challenge because with the loss of its non-profit designation comes the loss of a revenue source.

Currently, because of the 501 (c) 3 loss, Matchbox can no longer vie for grants from any organization until they retain that nonprofit designation, which makes the next few months tricky, because the reality is that if the $70,000 isn’t repaid by June, it’s likely MCT will have to close.

“If we don’t hold back on expenses now we won’t be here next year. It’s a rough truth,” Sedgwick Perry said. “If we don’t find a way to afford the next six, seven months without grants we will be done by June for good.”

However, that’s not something MCT is going to face without a fight. Matchbox has shored up its operations, including its constitution and bylaws, and are determined to increase marketing in a way to get MCT out more in the public’s eye.

It also is turning an eye to making sure there is an established treasurer on hand to make sure that lessons learned from the past are maintained going forward.

What’s more, those involved in MCT aren’t asking the public for things they aren’t willing to do themselves.

“I’m going to be honest. Our board we have now is so attached and so passionate to our cause, everyone of us is pulling out of our own pockets,” Sedgwick Perry said. “Of course many will say, ‘you’re not supposed to do that.’ Well, too damn bad. We absolutely, whole-heartedly, 100% refuse to give up. We are willing to do everything and anything we have to do to keep it open.”

Still, Sedgwick Perry isn’t blind to concerns voiced from the public and understands any skeptical questions raised from the MCT’s issues over these last eight years.

“I think it’s important that to all the people in the community that saw our announcement or in any other way had heard of or experienced anything from Matchbox that made them wonder if they should have the faith we do, we want to say we understand that,” she said. “We hear you and I think it’s fair. We wouldn’t mind at all for anyone to approach us and ask these same questions and more. The most important thing to Matchbox beyond our mission is the community itself. Because without it we will cease to exist.”

The next few months will present a daunting challenge for MCT, but there is hope. Sedgwick-Perry expressed confidence that Matchbox will regain its non-profit status and when it does will be applying for any and all grants it can to get back on track.

It’s also working with the IRS in determining a payment plan to get the money owed to the IRS. A bright point to that is they won’t have to pay it all back at once, but rather they only need to establish consistent payments to the IRS.

“Even knowing everything I do, even knowing every piece of what our yes’s and no’s are, I’m very optimistic,” she said. “The only problem I see is us being able to afford surviving until June. We will be reinstated. That is without a doubt.”

“We just have to get to the other side,” she continued. “Once we do that, that will cover operations. That will cover the program and the thrift store can continue to cover our payment plan for what we owe.”

In the meantime, Sedgwick Perry is asking the public to not turn away from what MCT does for the community and what it offers.

“We are very hopeful to fill the seats every night of our next performance, ‘A Seussified Christmas Carol,’” she said. “Please come show your support for Matchbox and have a great time doing it. The show will be a spectacular display of colors, lights, and comedy on Dec. 14, 15, 21 and 22. Four shows. Help us sell out and support our stars.”

To learn more about the background of what Matchbox faces, visit: www.matchboxchildrenstheatre.org and scroll down until you reach “Matchbox is in Danger.”

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