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Embattled nonprofit changes tactics

By Roger Greene
Coastal Observer

A nonprofit veterans group with an office in Litchfield is changing the way it does business after being cited for violations of state charity laws this month, according to the S.C. Secretary of State’s office.

The Veterans Support Organization was cited for failing to register 12 “professional solicitors” and for misrepresenting the portion of money it raises that actually goes to veterans, according to a letter from an attorney in the Secretary of State’s office to the organization’s financial officer in Rhode Island.

It was also cited for using printed material belonging to the Veterans Welcome Home and Resource Center in Little River for soliciting contributions without authorization.

The VSO is still able to solicit donations, but has until May 7 to correct the violations, according Reneé Daggerhart, spokeswoman for the Secretary of State’s office. Any additional violations face fines of up to $2,000 each, she said.

“The violations never should have happened,” said Kim Silva, who took over two weeks ago as VSO’s chief financial officer and chief operating officer. “It’s very easy to check with the state and see what needs to be done to be in compliance, and that should have been done.”

Silva has more than 14 years of experience working with nonprofits and said VSO is committed to better managing its growth and becoming compliant with South Carolina law.

“We want to clear up every compliance issue,” Silva said. “That is something [founder] Richard Van Houten has stressed to me. We understand the need to be transparent and accountable.”

Bob Hawkins, a Tradition Club resident and retired Army medical officer, became concerned about the VSO’s activities when he witnessed its solicitors seeking donations outside the Piggly Wiggly in Litchfield. Hawkins’ concerns included whether or not the solicitors were actually veterans, as was implied, and what percentage of contributions aid veterans.

Hawkins was told that 86 percent of contributions to VSO go to “overhead that supports veterans.” However, based on VSO’s financial statement for the fiscal year ending Sept. 30, 2009 filed with the Secretary of State’s office, that statement was a misrepresentation. It was also discovered that not all of the solicitors were actual veterans.

“My concern was the [solicitors] were dressed up in camouflage, military style uniforms giving the impression they had been in the military,” said Hawkins, who volunteers his time to support several veterans organizations. “We later found out that not all of them were veterans and that seemed inappropriate or deceptive to me.

“Also, we still don’t know much from a dollars perspective. It could be the funds are not being used for the purposes donors might think. I question whether or not all of the funds raised here stay in South Carolina. I’d very much like to see an accounting of what they have collected since they started here and where that money is going.”

An attorney for VSO said the organization is undergoing a substantial amount of changes and its entire accounting department had been let go two weeks ago, according to Daggerhart.

She said the attorney also said VSO is changing the way it pays its fundraisers.

VSO told the Secretary of State’s office it hired the 12 solicitors – 11 from Horry County and one from the Pleasant Hill community in Georgetown County – as “contract employees” who would receive 30 cents of every dollar they raised.

To cure one violation, VSO told the Secretary of State’s office the solicitors will be put on the payroll and paid an hourly wage, which would exclude them from the statutory definition of “professional solicitors.” However, a portion of their compensation will still be tied to how much money they collect.

The organization’s attorney said the claim that 86 percent of VSO spending goes to programs is at odds with what was reported to the Internal Revenue Service because VSO includes pay to veterans who solicit for it. The attorney also stated that as part of its accounting overhaul, the VSO will be looking at how this interpretation will be reflected in their future IRS filings, according to Daggerhart.

Silva explained the discrepancy resulted from the differing requirements for an internal audit and IRS filings.

“As of yet, I have not found any instance of misappropriated funds,” Silva said. “There are differences in the parameters between and internal audit and what is required by the IRS. They are laid out two different ways. I don’t think either is incorrect, it’s just the way they were accounted for. Hopefully, putting [the solicitors] on the payroll will help resolve these kind of issues. As we move forward, if we find anything that needs to be refiled or amended, it will be.”

VSO was founded in 2001 and has chapters in 18 states. Among its services it lists transitional housing for homeless veterans, work programs for jobless veterans, suicide prevention and advocacy.

Silva says her goal for the VSO chapter in Litchfield, as well as for chapters around the nation, is to build working relationships with local veterans support groups to better serve those in need.

“I hope those relationships can be built so we can collectively serve the interests of veterans,” Silva said. “That is very much the direction we are headed in.”

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