Since 2014, a nonprofit with one employee, no accomplishments related to its mission and no correct address provided to the IRS or S.C. Secretary of State has received $166,000 in Richland County hospitality-tax funds and will receive another $75,000 this fiscal year.
The charity, Second Chance Afterschool Learning Environment, Inc. (SCALE), describes itself on its IRS 990 forms and its website as an after-school tutoring/mentoring program for at-risk students with an additional mission to help the homeless.
But according to records obtained through the Freedom of Information Act, SCALE’s only activity has been funding a community parade/reunion in the Horrell Hill area and acting as a fiduciary pass-through for a Caribbean restaurant’s annual reggae concert.
And the group’s use of the funding has some County Council members questioning the county’s use and monitoring of hospitality, or H-tax, awards.
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Besides the support over the years of the hospitality tax money – a tax collected on restaurant meals and spent on efforts to attract tourists to Richland County – SCALE, which has a charitable, tax-exempt 501(c)3 status, also has received:
▪ A donation by a private individual of 32.7 acres of land the county did not buy as part of the $1 million Pinewood Lake Park purchase in 2012, including an earthen dam the county did not want for liability reasons. The most-recent valuation of the two parcels at 1217 and 1150 Old Garners Ferry Road by the Richland County Assessor’s office was a combined $472,700.
▪ A $24,000 easement paid to SCALE by Richland County for right-of-way on the dam for the county to construct a walking trail around the pond. Because of damage not repaired by SCALE since the October 2015 flooding, that portion of the walking trail still is closed to the public.
▪ $130,000 in H-tax money since 2015 as the fiduciary agent for the Carolina Sun Splash Festival, a Jamaican-themed reggae concert coordinated by MoBay Caribbean Restaurant that takes place in May at the Richland County Recreation Department’s Garners Ferry Road complex.
That means that in total, a nonprofit whose registered agent’s official address is an abandoned school, whose business address is a hair salon whose owner said SCALE has no connection to her business and whose address on file with the IRS is a rental property currently in foreclosure will have had checks written to it from Richland County totaling $320,000 by June 30, 2017, and, including the land donation, possess assets totaling $792,000 in the past three years alone.
When reached for comment for this story, SCALE CEO Patricia “Pat” Ford refused to answer questions about her group’s finances, name board members, give a current address or provide a list of activities that the group has done to fulfill its mission.
After saying only that the group intended to build a new facility on the land they were donated (a wooded tract with no roads in or out), Ford asked why the reporter was being “so nosy” and hung up.
An analysis of SCALE’s IRS 990 forms shows significant reporting irregularities that a spokesperson for the S.C. Association of Non-Profits (SCANPO) called “disturbing.”
The IRS requires nonprofits to submit 990 forms, which require charities to list their total income, how they spent it, their board members, their employees/CEO and related compensation, their assets and their financial position at the beginning and end of the year.
On no 990 forms obtained for SCALE from 2010 to the present does it fulfill those IRS requirements. Nowhere are board members identified and listed, nowhere is the annual compensation received by Ford listed and nowhere are any activities listed that support the charity’s mission.
The forms also are replete with financial irregularities.
On SCALE’s 2013 filing, it lists income of $70,050 in gifts and $42,050 in expenses ($33,000 in professional fees, $8,050 in rent (without a business address) and $1,000 on printing. That left a net asset or fund balance of $28,000.
In the following year’s filing, the amount claimed as carried over from the previous year is $2,000, or $26,000 less than SCALE said it had at the end of 2013.
That’s just one example.
There are many more, including gift amounts for particular years that change and mission statements that change. In 2012, SCALE told the IRS it existed to “enhance and develop communities in rural areas by promoting the implementation of knowledge and skills essential to economic development.” In 2013, it said it existed to promote family oriented activities “like an uplifting gospel concert or much-needed family/community activity to infuse some vitality into local markets.”
While having a brick-and-mortar business address is not required for a nonprofit, keeping one’s mailing address up-to-date with the IRS and Secretary of State’s office is, as is:
▪ Having a board that meets at least once a year and takes minutes.
▪ Keeping accurate records of financial information.
▪ Providing accurate information to the IRS via the 990 forms.
▪ Providing the public with its 990 forms and board minutes if asked.
▪ Providing the public and the IRS with the names of board members.
▪ Serving its stated mission of being a charity.
SCALE has met none of the above criteria expected of a 501(c)3 classification, according to its forms. When brought to the attention of SCANPO operations manager Ben Bullock, Bullock said clearly their files are “mixed up.”
“It’s hard to tell what’s malfeasance and what’s incompetence,” Bullock said. “Personally, I try never to assume malice when incompetence will explain it.
“These forms have a lot of problems that aren’t easily explained; they’re kind of all over the place. I imagine the IRS would have some questions about them if they ever looked at them, but the reality is they get so many every year that the IRS just does not have the capability to review and check every single thing.”
One thing Bullock said SCALE definitely is doing wrong is not listing the compensation amounts for its CEO, not listing board members and not making such information available when requested.
“They are required by law to do those things,” Bullock said. “SCANPO does not support decisions made to hide what nonprofits do. I would invite them to come to our office for training anytime.”
What does SCALE do?
According to its website, the stated mission of SCALE is to provide educational counseling to benefit testing for achievement of a higher level of education; provide tutorial assistance to improve academic accountability; provide employment readiness skills (proper planning and research); provide job placement information; provide assistance to homeless people; and increase tourism.
A search found no evidence of any academic, tutorial or homeless-support work by SCALE in recent years, at least. A call to Richland 1 spokesperson Karen York revealed no existing educational partnership with SCALE now or in the past to anyone at the district’s knowledge. And a call to the Richland County Recreation Commission revealed that SCALE rents no space at any of its parks or community centers.
Multiple requests made to Ford for a list of SCALE’s academic activities went unanswered.
The only verifiable activities by SCALE involve the management of a Horrell Hill community parade/reunion banquet and the distribution of money to the Carolina Sun Splash Festival, which is organized and run by MoBay Caribbean Restaurant, according to invoices obtained through the Freedom of Information Act, contact information and fliers for the event on Facebook and elsewhere online.
The nature of the event and its expenses raise questions. It received $65,000 its first year, $18,000 the second, then $47,000 this year, with SCALE collecting the checks from the county to disburse to MoBay, a private restaurant, to coordinate, secure entertainment, host, staff and sell food and drinks, according to the restaurant’s owner Michelle Edwards.
Edwards declined to comment on the record for this story but confirmed the relationship and details.
Expense sheets submitted to the county for that event are always to the penny of the award and do not provide receipts to validate numbers.
Receipts currently are not required by Richland County to monitor the expenditure of hospitality-tax disbursements. The county asks only for a good-faith summary sheet that is not fact-checked by county staff, according to county staffers.
According to the Hospitality Tax Grant Payment Request Forms submitted by SCALE to Richland County dating to 2014, SCALE claims it has spent every hospitality-tax dollar it has received to the penny on tourism events: $50,000 in 2014, $50,000 in 2015, $18,000 in 2016 and $25,000 so far in the fiscal year 2016-17. An additional $75,000 is yet to come.
But even without receipts, it is unclear why the county would give money that’s supposed to support tourism to a group whose mission is to work with at-risk children and the homeless.
“I don’t know anything about (SCALE) other than (Councilman) Norman Jackson always was the person sponsoring them, trying to get them funding,” Councilman Bill Malinowski said. “He said it was for after-school youth programs. That’s all he ever said it was for.”
Efforts to reach Jackson, who represents parts of Lower Richland County, were unsuccessful.
Giving a dam
The choice of SCALE as the beneficiary of a gift of land valued by the county at a combined $472,700 that was not part of the county’s $1 million purchase of Pinewood Lake Park – a project championed by Jackson – came at the recommendation of Jackson and others, former property owner John C. Gwinn Jr. said.
“Their name came up, among others, as being somebody in this area I could donate the land to,” said Gwinn, who confirmed that Jackson was among those recommending SCALE. “I understood that they helped children from disadvantaged areas.”
When told of SCALE’s listed activities, Gwinn was disappointed. “I’m sorry to hear that,” he said. “Maybe I could have looked a little harder to find someone to give it to. I was going on everybody’s honesty when they told me what SCALE did. So I said, ‘Oh, sounds like a good thing.’”
Since none of the expenses and activities SCALE lists has anything to do with increasing educational accountability, providing after-school tutoring or helping the homeless, SCALE’s finances invite questions that cannot be answered without receipts – receipts SCALE would not provide.
County Council members who were reached for comment were critical of H-tax rules.
“The law governing how H-tax dollars can be spent needs to be changed,” said Richland County Councilman Seth Rose. “Under the current statute, it is extremely vague and general as to what H-tax dollars can be used for. The result is abuse and poor financial allocations to entities that are providing no accountability.
“This is unacceptable.”
For Malinowski, SCALE’s expenses are yet another example of events with a local flavor getting money meant to bring tourists to Richland County. “When you’re in Hopkins, and 99 percent of the people at the event are from Hopkins, that does not deserve H-tax money,” Malinowski said. “That’s not tourism.
“With SCALE, I don’t know anything about them other than Pat Ford asking for money to help kids. ... What you’ve explained doesn’t seem to have anything to do with learning or helping kids. How can they justify H-tax for a reggae concert or small-town parade and reunion?”
Aiken is a Columbia journalist whose website, quorumcolumbia.org, publishes local investigative stories.