Helping a Nonprofit Be Less Transparent? That’s New!

January 8, 2018; Island Packet (Hilton Head, SC)

Normally, efforts regarding transparency and reporting requirements of nonprofits have a goal to ensure that as much information as possible is made available to the public for scrutiny. Recent cases of this reported upon by NPQ include the Alamo Foundation and the IRS itself. In the former, a legislator demanded to know how funds given to the historic landmark were being used, and in the other, a watchdog argued that the IRS should make readily available information it already has electronically. In both cases, the desire is to access a depth of information that would supposedly make decisions easier.

In South Carolina, specifically the Hilton Head area, a battle has been raging since 2013 about how transparent the local chamber of commerce needs to be. A local legislator has recently submitted a bill that would limit how much information a nonprofit is required to give.

If passed, Bill 3931, submitted by Rep. Bill Herbkersman (R-Beaufort & Jasper Counties) would require quarterly filing of information by any public agency receiving $100 or more in government funding. The catch is that the public agency would only be required to report in general terms how the funds were expended; any additional detail would only be required if specifically requested by the government entity providing the funding. If no additional details are asked for, none have to be given, even if requested under the South Carolina Freedom of Information Act. There would be no recourse for someone asking for a level of detail that had not originally been requested.

This comes at a time when a suit against the Hilton Head Island–Bluffton Chamber of Commerce has gone to the state Supreme Court for a decision. The issue for the Chamber has been percolating since 2013, when a request for information by a local activist, Skip Hoagland, sought information about how the Chamber was spending its money. After denying the request, the Chamber argued in court that it is not a “public entity” as defined in the S.C. Freedom of Information Act, and so is not required to follow its guidelines. The Supreme Court heard arguments about the case in October of 2017. If passed, the new bill would make any decision in the case moot.

The South Carolina Press Association developed a “citizen’s guide” to the FOI that defines entities covered by the act, specifically observing that Chambers are included:

A “public body” is any entity supported by public funds, even in part, or that expends public funds. Public bodies include state and local agencies, school boards and city councils… Even nonprofit agencies and chambers of commerce that receive public funds are subject to the FOIA.

In the case in front of the Supreme Court, Hoagland appears to take some pride in going after people and organizations. The Chamber’s filings in the case reportedly indicate its members have “been under attack” from Hoagland. He has also been sued for libel in separate cases by a local mayor and a councilwoman.

May reasons are being offered for why this bill being is proposed by Rep. Herbkersman at this time. He has said the bill is in response to work at his subcommittee on local municipalities and the need to create uniformity in reporting requirements, but the reports do not indicate whether the committee was responding to anything specific. After being questioned about the impact of the bill, Herbkersman has said he does not want to circumvent the FOIA and that the bill will be rewritten to make the reporting requirements as “stringent as possible.” The head of the SC Press Association has come out against the bill, saying it is intended to address the Supreme Court case and will result millions of dollars of government funds being hid. The head of the Chamber of Commerce does not seem to have asked for the bill, but has said he and his organization are all for transparency.

In the Alamo case, lawmakers want to know the details of a contract using government funding. In the IRS situation, watchdogs and researchers want easy access to all of the information the IRS has on nonprofits. In another case, in Richmond, Virginia, legislators want to know the name of a for-profit corporation that might be using a loophole to take millions of government funds. In these, as in most cases, the rule of thumb is that the more information we can have, the better we can keep tabs on how our funds are being spent. He may not in fact have intended it that way, but it appears that the bill Herbkersman introduced bucks that trend.—Rob Meiksins