SC Department of Revenue
non-profit update #16- 07/21/1998


July 21, 1998

 RE: Non-Profit Update #16

 Below you will find an update of selected items of interest to the Non-Profit Community.


Jane Baker=s Departure


To our horror, on August 1st, Jane Baker will be returning to Charleston to go back to work for her former boss, Richard Stoney. Jane has headed up the DOR=s Non-Profit initiatives for the past 32 years and her absence will be sorely felt. Jane=s new address will be PO Box 982, Charleston, SC 29402. Since Jane directed the Non-Profit endeavors of the agency, given her departure, I am unsure of the future direction of our Non-Profit efforts. I welcome your input or suggestions.



Revenue Ruling # 98-16

Fundraising Events by Non-Profit Organizations


The DOR very recently issued a helpful Revenue Ruling which summarizes the application of the sales tax, admissions tax and the Alcohol Beverage laws to fundraisers

conducted by charities. The Revenue Ruling provides examples in question and answer format. It may be downloaded from our Web Site at In addition, we have a limited number of copies available.


Transfer of Charities Division


The Charities Division of the Attorney General=s Office was transferred back to the Secretary of State=s Office effective July 1, 1998.





The S.C. Association of Non-Profit Organizations (SCANPO) is marking its first anniversary. Established in 1997, SCANPO has grown to nearly 175 members statewide. Less than one month ago the first annual meeting was held in Columbia. Over 140 participants heard from a variety of speakers on issues important to non-profits. During this year, SCANPO will offer opportunities for professional development, including the May 13 seminar entitled ASmart Money Management for Non-Profits.@


For information on any of SCANPO=s initiatives or membership please call (803) 808-6547 or write SCANPO at P.O. Box 11252, Columbia, SC 29211.



Planned Giving Update


The South Carolina Planned Giving Council


The South Carolina Planned Giving Council is a nonprofit organization founded in 1993 to promote collaborative effort among members of the legal, financial, and development communities in serving the charitable, financial, and estate planning needs of donors and clients. It is one of over 100 regional councils of the National Committee on Planned Giving which includes more than 10,000 members. The SCPGC mission is to provide training, education and to provide an opportunity for networking with other professionals concerning planned giving. Three programs are offered each year on various planned giving topics ranging from basis to more sophisticated planning. The next meeting is scheduled for September 23, 1998 at Columbia College and will be on AInsurance Products from A to Z and Their Use in Planned Gifts.@ Membership is $75 annually.


Persons interested in membership or other information may call H. Rothrock Menge, Vice President, Membership at (803) 929-1192 or write Rocky at Wheat First Union, 1901 Main Street, Suite 620, Columbia, SC 29201.



How Workers= Compensation Requirements Effect Non-Profits


A problem of general interest to workers= compensation law is whether charitable and non-profit employers, such as churches, universities, the Red Cross, the Salvation Army, the Y.M.C.A. and charitable hospitals, are subject to workers= compensation acts which (like South Carolina) contain no specific language including or excluding them. A large number of states hold such employers subject to the typical compensation act. There is, however, a substantial minority view. According to a 1948 state Supreme Court decision, South Carolina is such a state. In Caughman v. Y.M.C.A., 212 S.C. 337, 47 S.E. 2d 788 (1948), our Supreme Court held the definitions of employers and employees who are subject to the provisions of the Act are very broad and comprehensive but they do not include charitable institutions. Surprisingly, the Court has not addressed the issue since that time. Further complicating matters, the Court=s decision in part relied on the doctrine of common-law charitable immunity, which has been largely abrograted by the Courts since 1948 (which is why the General Assembly has visited the issue on several occasions.)


In addition, volunteers are generally not covered by Workers= Compensation Act. Ordinarily, voluntary, non-compensated public service work does not establish the requisite employment relationship for the purpose of workers= compensation. There are, of course, exceptional circumstances where the general rule would be inapplicable, however, whether an exception to the general rule would come into play depends upon the particular facts.



Securities Regulation and Non-Profits


Issue 27.2 of the Stetson Law Review contains an extensive article on state and federal securities regulation and exemptions for non-profits, particularly those contained in The Philanthropy Protection Act of 1995. The title of the article is Securities Regulation of Fundraising Activities of Religious and other Non-Profit Organizations.




Internet Update


The IRS Publication 78, Cumulative List of [Exempt] Organizations is now readily available on the Internet, _info/eo/. The site has search capabilities and is very user friendly. (From the DOR=s experience, particularly dealing with Bingo Charities, it is not infrequent that a charity will claim to be a 501(c)(3) when in fact it is not on the IRS list.)


Although it uses outdated data, the National Center for Charitable Statistics provides a state-by-state statistical breakdown of the number and type of non-profit groups in all 50 states. The Web site also offers a breakdown of charities by type of organization. Data for individual charities can be pulled from the Web site as well. The data used is from 1992 and the National Center hopes to update the site with 1994 figures soon. The address is


The DOR was one of the first state agencies to have a Web Site and we added a section dedicated to non-profits in July of 1997. Interest in the non-profit section has grown from 98 Ahits@ in July to 326 in January 1998, to 735 in February.


We recently added the text of the South Carolina Statutes and Regulations to our Internet Site. In the next two months, we will be adding the Sales and Property Tax Chapters from our upcoming State Tax Guide for Non-Profits. We encourage your input.



GAO Report on Non-Profit Hospital Conversions

Highlights South Carolina


Between 1990 and 1996 national surveys estimated that 1,992 of more than 5,000 not-for-profit hospitals in the United States converted to for-profit status. In 1996 alone, more than 60 not-for-profit hospitals converted to for-profit status. (According to The New York Times, the conversion of health care institutions (including insurers) has led to the largest transfer of charitable assets in history.)


The GAO recently studied the issue of Non-Profit Hospital Conversions and very recently issued a report. The GAO studied 14 conversions in six states. Three of the 14 conversions studied were in South Carolina: Mary Black Memorial Hospital; Carolinas Hospital System; and Hilton Head Hospital.



ABA Drafts Model Retainer Agreement


The Business Law Section of the American Bar Association has drafted a Model Retainer Agreement for lawyers who desire to donate pro bono legal services to non-profits.


Copies of the agreement may be obtained from Jane Baker (803) 898-5445.




Non-Profits Eligible for Purchase from Department of Corrections


The South Carolina Department of Corrections sells a number of very reasonably priced items (typically business furniture and supplies). Sales are limited to governmental agencies and non-profits. Interested persons should contact Tony Ellis (803) 896-8516.



Foundations: An Under-used Resource for South Carolina


Communities looking for infrastructure develop funds may be overlooking a rich resource in the hundreds of foundations specializing in community development, said a marketing consultant at the 1997 annual meeting of the South Carolina Rural Development Council, held in Moncks Corner. On average, about 30 foundation grants go toward community development in South Carolina. The state may actually be eligible for five times that number of grants, by national averages. One program that communities ought to target is the Robert Wood Johnson Foundation=s recently announced Southern Rural Access Program. The Foundation has made available $13.8 million over three years for this first phase to increase health care access in South Carolina, Alabama, Arkansas, Georgia, Louisiana, Mississippi, East Texas and West Virginia.



IRS Auditing S.C. Trooper=s Association for UBIT


I have addressed the issue of UBIT in previous mailouts. Perhaps some in the non-profit community view UBIT as a purely hypothetical concern. According to published reports, the IRS is auditing the S.C. Trooper=s Association for Unrelated Business Income Tax. The articles note that the IRS is examining royalties, advertising and sales revenue from the Trooper=s magazine.



Museum and University Updates


We recently sent specialized mailouts to a variety of (1) museums and (2) colleges and universities. The mailouts contained tax updates as well as other items of interest to those groups. Write us is you would like a copy of either mailout or would like to be put on these mailing lists.




Mailing List


I am in the process of cleaning up my mailing list. If you have not already done so in the past, let me know if you would like to continue receiving these updates. Please also correct your name or address. Simply initial a copy of this page and mail or fax it back to me by August 1 or you can e-mail me.



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