South Carolina state law says 30% of accommodations tax (A-tax) funds must go back to a local government’s Designated Marketing Organization (DMO), which then works as that area’s tourism marketer.
In Charleston, the DMO receiving roughly $2 million is the Charleston Convention and Visitors Bureau (CACVB). In addition to receiving Charleston’s A-tax revenue, the CACVB also serves as the DMO for Kiawah Island, Mount Pleasant, North Charleston, Seabrook Island, Sullivan’s Island, the Isle of Palms and Charleston County. CACVB thus also receives 30% of the A-tax money collected in each of those jurisdictions.
Through the years, the nonprofit CACVB has received kudos for its marketing of the Holy City and its environs. The CACVB aggressively promotes Charleston, and their work helps consistently keep Charleston among the world’s top travel destinations. With offices on King Street and four area visitor’s centers, it’s a sprawling organization whose most recent abbreviated tax statement in 2020, shows a reported income of $18.8 million.
It’s defined as a nonprofit, but CACVB still earns a lot of money — sometimes in the very same ways that for-profit, non-A-tax-funded local newspapers and magazines and the tourism website Charleston.com — earn theirs. CACVB revenue sources include advertising sales in multiple publications like their Charleston Visitors Guide, Wedding Guide and Destination Planning Guide (and their companion websites) and ExploreCharleston.com.
That lack of A-tax funding for similar operations irks some in the local media sphere. Robert Smith, owner and operator of Charleston.com, said his website also brings tourists to the Lowcountry. Smith said 21,025 people visited the site between March 3-7, 2022. But as a for-profit businessman he’s not eligible for A-tax support. “If I am promoting Charleston as a destination, and they are promoting Charleston as a destination, it seems reasonable to get a subsidy from the city,” he said.
So where does CACVB’s funding come from?
An audit the City Paper reviewed of the CACVB’s 2017 finances showed $346,833 in regional CACVB funding revenue from the South Carolina Department of Parks, Recreation, and Tourism. Publication, advertising and program earnings brought in $3.26 million, while the CACVB’s membership base of more than 600 tourism-related businesses contributed $451,231. Membership benefits include: listings on ExploreCharleston.com, sales and media leads/referrals, trade shows, various co-op opportunities, and educational seminars and meetings. In 2017, the CACVB’s lodging cooperative — whose 85 member hotels charge an additional $1 or $2 per room per night (on top of the 2% A-tax charge) — also earned CACVB more than $2.2 million.
Despite income from sources like advertising, Bobby Creech, a spokesman for CACVB’s accounting firm Webster Rogers LLC, said the nonprofit does not compete with the private media sector. Despite $3.26 million in revenue, advertising in CACVB publications has very little taxable unrelated income due to the same sorts of expenses any publisher faces, he said. Still, the CACVB makes those expenses tough to determine. The organization makes its form 990-T — unrelated business expense — forms available to the public, but does not provide a detailed breakdown of those expenses.
CACVB’s vice president for media and innovation development Doug Warner said representatives of the local municipalities it serves review and approve the CACVB budget, but these murky finances have led to a Freedom of Information Act lawsuit against the CACVB, and concerns from some municipalities. Last year, Port Royal resident Mare Baracco filed a lawsuit against the CACVB. In 2005, Folly Beach partially withdrew from the CACVB to handle its own A-tax spending. More recently, the Isle of Palms formed a task force to study its relationship with the CACVB.
In her lawsuit, Baracco alleges the CACVB has violated the state’s Freedom of Information Act by not releasing its financial data. Baracco, a business consultant and federal government contractor, said she visits the city overnight and pays accommodation taxes, which gives her the right to question CACVB spending.
In 2021, Baracco filed an action after seeing a contract between the CACVB and Charleston County in which the CACVB said it would abide by the Freedom of Information Act in its business relationship with Charleston County. Yet the CACVB has declined to reveal an itemized accounting per Baracco’s FOIA request. CACVB attorney David Jennings wrote to Baracco that the CACVB can provide “the receipt of funds from Charleston County, but the CACVB’s accounting records do not itemize or allocate expenditures according to individual revenue categories.”
Baracco declined to discuss the lawsuit, but said, “I am a regular citizen who wants to know how our government functions. I’d just like to see how public money is being spent in the state.”
The lawsuit has been mired in early stage motions, but a hearing is expected next.
Questioning full partnership
In 2005, Folly Beach formed a Tourism and Visitor Promotion Committee, taking over its DMO responsibility from the CACVB. During the fiscal year that ended June 31, 2021, the town received $1.5 million in A-tax revenue, with 30% going to its DMO, according to the town’s annual accommodations tax reporting form. Folly Beach also continues its annual CACVB membership, paying $25,000 in addition to $22,000 for CACVB advertising.
“All of our A-tax money was going to the CVB,” Folly Beach Mayor Tim Goodwin said. “Now we have more control over what goes where instead of all of the money going (to the CVB) automatically.”
Last year, under the accommodation tax formula, Isle of Palms sent $733,000 to the CACVB, according to Ray Burns, chairman of IOP’s Accommodation Tax Advisory Committee. The IOP City Council recently formed a task force to study alternatives ways to market the beach resort.
“We feel there is a place for the (Charleston Area) CVB in the marketing efforts, but there is also a place for our own marketing organization to do more targeted marketing for the Isle of Palms,” he said. “I think they’ve done an excellent job of marketing Charleston to the world … the recognition Charleston has gotten — a lot of the credit for that goes to the CVB.”
When told of Baracco’s lawsuit accusing the CACVB of declining to release its financial information, Burns added, “That is one of our issues with them. We are looking for more transparency, and we haven’t to this point … gotten that transparency.”
Help the City Paper keep delivering excellence
Winner of top 2021 state journalism honors (best editorial writing and best cartoon), the Charleston City Paper brings you the Best of Charleston every day. Support our “unafraid” journalism with a one-time donation or become a member of the City Paper Club.