Monday, June 17, 2013

UPDATE: Charleston Waterkeeper in non-profit purgatory

"Administrative oversight" causes revocation of 501(c)3 status

Posted by Susan Cohen on Mon, Jun 17, 2013 at 12:07 PM

Charleston Waterkeeper founder Cyrus Buffum at the 2011 Water Ball
  • Ben Walters file photo
  • Charleston Waterkeeper founder Cyrus Buffum at the 2011 Water Ball
UPDATE: Story updated below after talking with Waterkeeper Alliance Executive Director Marc Yaggi.

This weekend, local activist Ken Bonerigo sent an e-mail to supporters of Charleston Waterkeeper, informing them that the organization’s tax-exempt status had been revoked by the Internal Revenue Service on May 15, 2012. Because Charleston Waterkeeper failed to file the proper forms for three consecutive years (2009, 2010, and 2011), it was no longer a 501(c)3 organization.

The IRS’ Exempt Organization Check and Guidestar websites confirmed Bonerigo’s claim. As he pointed out, while Charleston Waterkeeper has been accepting donations — it hosted its annual Water Ball in May — it hasn’t previously made the revocation status public.

In an e-mail sent out to supporters on Sunday, Charleston Waterkeeper founder Cyrus Buffum admitted to the revocation and offered an explanation. He wrote that the status was revoked on March 18, 2013 and said that between 2009-2011, Charleston Waterkeeper received donations through the Waterkeeper Alliance’s non-profit status.

He added:

Eventually, on August 31, 2011, we received our own 501c3 designation from the IRS. We, however, neglected to realize our responsibilities to file an e-Postcard, a summarized annual filing to the IRS, for the years we operated under the Waterkeeper Alliance’s fiscal sponsorship. This administrative oversight lead to our automatic revocation as seen in the IRS’s explanation here.

According to the Waterkeeper Alliance, whose national office is based in New York City, Charleston Waterkeeper has been operating under the national organization’s 501(c)3 status since it lost its own. The Waterkeeper Alliance has been processing Charleston Waterkeeper’s gifts, and contributions are still tax deductible for donors.

There are more than 200 Waterkeeper organizations spread out over six continents, and the national office says this situation has happened to other branches before. They say that the Waterkeeper Alliance doesn’t have any oversight of the financial dealings of Charleston Waterkeeper, since it is an autonomous organization, but when a branch takes on the Waterkeeper Alliance license, they sign forms saying they will follow protocol and file with the IRS.

Charleston Waterkeeper has a year to get its status back, and it is currently at work with its attorney and CPA to do so. Buffum wrote that the appropriate documents will be submitted this month and that the filings will be made available to the public.

Though the local organization collects donations on their website through a Charleston Waterkeeper-specific PayPal account, fine print below the “Donate” button notes “Charleston Waterkeeper is currently accepting donations through our fiscal sponsor, the Waterkeeper Alliance.” However, it’s unclear how long that memo has been present on the site, since a version of the site cached by Google on May 31, 2013 showed no such wording.

Buffum founded Charleston Waterkeeper in 2008, “focused 100 percent on water quality issues in the Ashley/Cooper River Basin,” according to the organization’s website.

UPDATE: Marc Yaggi, the executive director of the Waterkeeper Alliance, says he cannot remember a situation like this happening in the past with any of the national organization’s other partners.

“Charleston Waterkeeper made us aware immediately when they received notice from the IRS that there had been an oversight and they had failed to file some paperwork,” he says. “They’ve kept in close communication about it and given us a good level of confidence that they’re taking measures to correct their oversight.”

Yaggi is confident that Charleston Waterkeeper will be able to clear up the matter with the IRS and continue to operate as a licensed Waterkeeper Alliance organization. From what he understands, it should be a fairly simple fix, but it would be problematic if the situation wasn’t remedied. Yaggi adds that donations to Charleston Waterkeeper will remain tax deductible.

“Charleston Waterkeeper is continuing to do its mission-related work to protect everyone’s right to clean water in the Charleston area,” he says.

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