With strings attached
Two cents out of each dollar spent for a night in a hotel room or a short-term rental in South Carolina funds the Accommodations Tax Program. Last year, the A-tax program collected $75.8 million statewide. This year, an estimated $7 million in A-tax funds could benefit the City of Charleston.
Of the A-tax money Charleston receives, 65% is directed to flow to nonprofit organizations that bring tourists to town. A better-than-expected 2021 tourism season, bouncing back from coronavirus, has given the city a larger pot of A-tax revenue to share with nonprofits. This year, they’re lining up to compete for $2.9 million in grants, which includes about $1 million not spent in 2021 due to the pandemic.
Charleston will begin accepting grant applications in early summer and then announce grant awards in January 2023, said the city’s chief financial officer Amy Wharton. Some have already received grants early this year from the unexpected money collected last year, she added. The groups who received the grants, however, have been warned that if coronavirus rebounds, there might be less money to go around.
Who gets the grants
Once an organization makes a grant request, the city’s Accommodation Tax Advisory Committee, chaired by City Councilmember William Dudley Gregorie, reviews the applications and then makes funding recommendations to city council. Decisions are based on which applicant is best suited to attract tourists to the city’s hotels and put “heads in beds,” Gregorie said, adding that can include smaller nonprofits like theater companies.
“The city wants to be more diverse, and we are fighting for the smaller organizations,” he said. “Otherwise, the A-tax program might appear to be an entitlement program for the larger organizations.”
In Charleston’s nonprofit world, where performing and visual artists and museum staff entertain and educate, it can be a “tale of two cities” scenario over who gets A-tax money and who does not. A-tax funds can present a sink-or-swim reality for some smaller local nonprofits.
Scott Watson, director of the city’s cultural affairs office, said the A-tax program helps the city “communicate the most inclusive and broadest based reflection of what Charleston’s cultural scene is about. It can be everything from the symphony and the Gibbes Museum of Arts to some of the smaller theater companies.”
The money, Watson explained, can’t be used for a purpose like sending a local high school marching band to perform in another state, although that might raise Charleston’s profile. And while one single large event can bring more tourists to the city than multiple smaller events Watson echoed Gregorie’s assertion that the city seeks to balance its support for all groups regardless of size.
“We would hope that when the Gibbes attracts tourists to Charleston they also discover Ann Caldwell at Circular Church,” Watson said. “We can create an economy that is supportive of all the creative community and then we can have a promotional effort that draws attention to the smaller events.”
Through the years, A-tax funds have helped establish some groups that have evolved into well-known arts organizations, like Charleston Jazz. Currently, Watson has high hopes for the A-tax-funded Charleston Literary Festival, which was launched by the Charleston Library Society.
“It appeals to a lot of people who come to see their favorite authors and now it is a separate nonprofit,” he said of the festival which received its first round of A-tax money in 2019. “The Charleston Literary Festival is building a good reputation. It is an investment in the future.”
A bright future without accommodation taxes?
Cara Leepson, executive director of Redux Contemporary Art Center, sees a questionable future for her organization without A-tax funds. Redux stages art exhibits, film screenings, classes and free events throughout the year. Redux’s artist-in-residency program has launched many of Charleston’s best local artists, and its galleries and exhibitions have showcased acclaimed works by artists of all disciplines. The center has applied for A-tax funding twice since Leepson became executive director in 2017. But twice it has been denied.
Being turned down for A-tax funding is “very unfortunate!” Leepson said in an email to the Charleston City Paper. Recently, the center has been mentioned in The New York Times and The Washington Post. With that national coverage, Leepson said she’s hoping “the city sees our impact enough to know our impact with the tourism in town.”
Leepson, who joined Redux as an intern in 2009, is among those who have wondered if the A-tax process “prioritizes the bigger organizations and doesn’t really support the little guys like us who still have an impact on the economy. We’re used to this kind of thing, but it still sometimes is upsetting as it doesn’t give us a chance to reach a larger audience.”
If Redux obtained A-tax funding, Leepson said, she’d use the money to develop more programming for out-of-town visitors and boost the marketing program. “But unfortunately we don’t have the funds to invest in those opportunities with our limited budget. It’s somewhat of a double-edged sword.”
Watson said Redux has been encouraged to apply for A-tax funds in the summer. Now that the center is in a new more visible location on upper King Street, they are more likely to make a better case that they can attract tourists, he said.
Funding supports a place where children play and learn
Less than a mile and half south of Redux, tiny figures create a different kind of art on Ann Street at the Children’s Museum of the Lowcountry. Although the coronavirus shortened the museum’s hours, executive director Nichole Myles said through an outreach program to local schools, remote teaching and a mobile museum, the Children’s Museum reached about 35,000 to 40,000 children. Some of those kids, she added, came to the downtown location with their parents, including out-of-towners. Writing good grants and advocating for children has led to sustained support from the city, she said.
“Over the seven years I’ve been at the museum we have seen a significant increase in our A-tax funds from about $30,000 in 2015 to $105,000 in 2020,” she said. But she issued a word of caution, too. “As with any grant program you have to be careful what you ask for so that you are able to execute what you say you’re going to do,” she explained. “You have to be a good steward of those funds. That is how you build trust to keep getting funded.”
A-tax rules are strict
Nonprofits must report how they spent the grant and can’t spend the funds for operating expenses. Smaller grant amounts are issued in one annual disbursement. Other funds are released after requests for reimbursements.
But not all nonprofit art groups have delivered on what they’ve promised. And when they don’t, the city steps in and asks questions, especially if an organization does not spend all of the money it’s awarded within its allocated two years.
Amy Wharton said the city’s “internal audit division does perform audits of organizations on an annual basis, however, we do not audit every organization. We also ensure that the funds are spent on the program for which they applied. We have had a couple of instances in which an organization was not in compliance.”
One of the groups, which was required to return $4,500, has since disbanded, Wharton said. The other group, Art Forms and Theatre Concepts, is still functioning.
Wharton said the city awarded Art Forms $20,000 in 2018 and 2019; however, Art Forms was only reimbursed $4,994.59 and $3,956.61, respectively, in those years.
“They did receive an award in 2020, but we did not pay them anything in 2020, as there were no eligible expenses to reimburse,” she said. “Art Forms has applied for funding in 2022. If the money is awarded, it will have to present approved receipts to be reimbursed for the expense.” she said.
Watson added there was no financial impropriety suspected with Art Forms. Basically, he said, the company couldn’t produce documents substantiating eligible expense items, so they simply didn’t get that portion of their grant. To help ensure compliance, Art Forms is now coordinating its A-tax requests for disbursements through the city’s Office of Cultural Affairs and has been receiving guidance from Watson.
Art Forms’ artistic director Arthur L. Gilliard, who founded the company more than two decades ago, said, “We did not spend it on promotions. We spent it on general operations. The Accommodations Tax money should be spent (on) advertisements and promotional things to bring tourists in.
“I felt very bad after that incident,” Gilliard added. “We had such a perfect record prior to that.”
To apply to the Charleston’s Accommodations Tax Grant program, contact the Business Finance and Revenue Collection Office at 116 Meeting Street. Eligible nonprofits must demonstrate an ability to promote tourism, list their advertising or promotion related to tourism development, and calculate the number of non-residents tourists they could attract to an event. For more details, go to: https://www.charleston-sc.gov/123/Community-Assistance-Accommodations-Tax.
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