Charities breaking the law, soliciting donations while on suspension

Updated: Nov. 7, 2019 at 7:00 PM EST
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CHARLESTON, S.C. (WCSC) - Hundreds of charities in South Carolina are collecting money when they aren’t supposed to be and dozens of them were right here in the Lowcountry – taking in money despite being under state suspension.

According to the Secretary of State, when it comes to nonprofits, South Carolina ranks in the top 10 across the nation when it comes to charitable giving. From to churches to museums, animal societies and hospitals – all working to make the Palmetto State a better place. One of those is Carolina Studios.

“We teach children how to record their own music when they use a computer – so I call it recording arts using computer technology,” Sam Epstein, a member of Carolina Studios’ board, said.

Carolina Studios was founded in 2001. You might recognize the name because Mark Bryan, with Hootie and the Blowfish, is on the board.

“We serve, on average, about 1,800 kids a year,” Epstein said. “We’re in the schools every day, every week.”

Carolina Studios is one of more than 12,000 nonprofits currently registered in South Carolina. They were also one of the nonprofits that was on the Secretary of State’s “Suspended Charities” list.

Up until Live 5 News emailed Carolina Studios, Sam claimed they had no idea the charity was on the suspended list.

In order to be a nonprofit, you have to register as a “Charitable Organization” with the Secretary of State. You must also send in your financial reports every year so the state can keep tabs on how you spend donor money.

If you don’t, the Secretary of State’s office sends you a notice saying they have not received an annual report. After 15 days, if they charity still does not file, they are issued a fine. That fine is $10 a day – until it maxes out at $2,000. Once a charity gets to that point, they are placed on the suspended list. That list is published online to the public. Notices are sent every step of the way.

“It’s very frustrating,” Mark Hammond, South Carolina’s Secretary of State, said. “We’re not here to punish the nonprofit community – we want to work with the nonprofit community.”

The number of charities suspended fluctuates every week. At last check, there are nearly 300 suspended groups – almost 100 of them are in the Lowcountry.

If you’re on that list, you are not supposed to be asking for donations.

When Live 5 News first started investigating, we reached out to well-known charities such as Follypalooza – which was on the list yet still collected thousands of dollars at its annual cancer fundraising event at Folly Beach.

Follypalooza leaders said they weren’t available to discuss their suspension on-camera. But they did send a statement saying in part:

“Despite completing the routine paperwork, it was not received by the South Carolina Secretary of State. Follypalooza contacted the Secretary of State’s office to inquire and has since resubmitted the documents and paid the fine.”

All of the local suspended charities were contacted, but the ones that responded said they had no idea they were suspended – despite the state sending notices.

“It’s probably more on us and it’s probably something we as a board need to be more careful of managing,” Epstein said.

Epstein also thanked Live 5 News for bringing the situation to their attention.

Carolina Studios board members pitched in to pay the fine – out of their own pockets, not from donations.

The investigation also paid off for the Secretary of State who requested the list of suspended charities that were still soliciting donations.

Since the inquiries, 11 charities have resolved their violations and have been removed from the suspended list, according to Shannon Wiley, General Counsel with the Secretary of State’s office.

Last year, according to the Secretary Hammond, their office collected $381,000 in fines. Their office retained $200,000 and the rest went to the general fund of South Carolina.

For a full list of suspended charities in South Carolina, go here:

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