Police started investigating allegations against Mr Reed, Rotherham MBC's deputy Labour leader, after the discovery of alleged financial irregularities at the forum, which he helped to set up (LGC, 4 December).
The forum held an emergency meeting on Tuesday and agreed a review of financial procedures. Vice-chair Veronica Afrin said at the meeting: 'The forum remains a financially viable organisation whose integrity should not be called into question by allegations which relate to the activities of individuals.'
New forum convenor Bob Wilkinson said he had no doubts about the probity of the forum itself. But he added: 'If these allegations are proven then the forum will have been the victim of fraud.'
Forum spokesman Graham Brown said: 'Only two councils to my knowledge have actually left the forum. There has been no mass exodus.'
He said councils were becoming more interested in the forum's aims.
Rotherham has given David Smith responsibility for managing community regeneration, following the suspension of community regeneration policy officer Bob Bone in relation to the same allegations of misuse of funds.
Neither Mr Reed or Mr Bone have been arrested or charged with any offence in connection with the police inquiry.