S.C. Secretary of State Mark Hammond has started an inquiry into local food and wine festival Coastal Uncorked Inc., a spokeswoman with the state agency said Wednesday.
Renee Daggerhart, media relations director for the secretary of state’s office, did not specify the focus of the investigation but said it was prompted by an inquiry from the public.
“We have received an inquiry and are looking into it,” Daggerhart said.
The secretary of state’s office regulates corporations and charities that operate within South Carolina.
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Daggerhart said Coastal Uncorked registered with the state as a nonprofit corporation. Coastal Uncorked does not have nonprofit status, according to the Internal Revenue Service.
Scott Brandon, a spokesman for Coastal Uncorked, said the event’s November 2009 application for non-profit status was denied by the IRS in mid-February. Brandon said Coastal Uncorked supplied additional information to the IRS about a week later and eventually hopes to get its nonprofit status approved.
“There’s no dirt in this thing,” said Brandon, whose Brandon Agency is handling marketing and public relations for the event.
Myrtle Beach-based Coastal Uncorked, now in its second year, has drawn criticism from some area residents who say the event has misrepresented itself as a nonprofit agency that gives a substantial portion of its proceeds to two area colleges.
Coastal Uncorked has donated $1,000 apiece to Horry-Georgetown Technical College’s culinary school and Coastal Carolina University’s hospitality program.
“Every time Coastal Uncorked puts out a news release, they brag about the fact that they’re giving scholarships, but it’s actually less than half a percent of their net income,” said Ann Coghlan, a city resident who says tax dollars are being wasted on the event.
Brandon, however, said the colleges agreed to put most of the event’s first-year profits toward marketing Coastal Uncorked so future events might generate larger donations.
“They understand that if we’re successful, it will help them in the long run,” he said. “That was the first year for the event. These things take time.”
Coastal Uncorked has received at least $380,000 in public funding from Myrtle Beach over the past year -- $80,000 from accommodations tax funds and $300,000 from a 1 percent sales tax the city gives to the Myrtle Beach Area Chamber of Commerce.
Coastal Uncorked -- scheduled for May 8-15 -- has requested an additional $150,000 from the city’s accommodations taxes this year. The City Council has not yet voted on that request. Coastal Uncorked's nonprofit status is not a factor in the event's eligibility for city funding.
Brandon said Coastal Uncorked is one part of a widespread effort to replace May biker-related revenue that no longer comes to Myrtle Beach since the city enacted strict laws in 2008 designed to curb the motorcycle rallies. He said ticket sales indicate a larger crowd will attend this year’s event, and 70 percent of the tickets have been sold to people living in out-of-market ZIP codes.
The event attracted about 4,200 people last year, Brandon said. That is fewer than the 12,000 tourists Coastal Uncorked said it would draw in its grant application for first-year funding.
Coastal Uncorked's pending grant application projects 15,000 visitors will attend this year's event.
Read Thursday's edition of The Sun News for more about this story.