The following Post and Courier article tells the story about a nonprofit shelter that got away with a lot while failing its customers in an equally large way. "For Shame" doesn't begin to cover how this absentee board not only dropped the ball but didn't pay any fiduciary attention. And while the Post and Courier article appears to level its aim more at funders and regulators, I would pose that the only real guilty party is the board.
NORTH CHARLESTON — An executive director, dipping into a federal grant. A new leader, struggling to break even. An expansion project, put on pause. And a damning health inspection, revealing rats, dirt and crumbling walls.
These were some of the problems that fueled the protracted collapse of the North Charleston Community Interfaith Shelter, a nonprofit inspectors shut down in January for unsafe conditions. At one time the Lowcountry’s largest transitional housing unit for homeless veterans, Interfaith is now a run-down building closed for the foreseeable future.
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Disorganization, mismanagement and financial problems precipitated the shelter’s demise, a Post and Courier investigation found in June. But more than internal troubles doomed Interfaith, also known as the Good Neighbor Center. As the shelter limped along for three decades, local, state and federal regulators failed to spot numerous problems and raise alarms.
Blame the U.S. Department of Veterans Affairs, a major funder, for not auditing the shelter sooner. Fault the Internal Revenue Service for rubber-stamping its nonprofit status. Question the S.C. Secretary of State’s office for not doing more to warn donors of its poor standing. Criticize its board for not being more attuned and attentive to operations.
Interfaith sidestepped intervention up until the bitter end. It failed to submit informational returns for several years, eventually prompting the IRS to revoke its tax-exempt status. But it was a tenant complaint — not a federal or state agency — that instigated the inspection that led to the shelter’s demise.
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In the end, the shelter’s stormy history underscores the tragedy of regulatory negligence: Lax oversight exacts a human toll. Interfaith’s closure deprived the community of a much-needed resource, robbing residents of a roof over their heads.
Its story also illustrates the gaps and challenges of monitoring the nonprofit sector, which has grown to about 1.8 million organizations across the United States.
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The Good Neighbor Center, a nonprofit shelter in North Charleston, has been named as a defendant in six civil lawsuits filed since January. File/Staff
File/Staff
Budget cuts have shrunk the IRS, leaving the agency with fewer employees and resources to oversee nonprofits. A smaller federal agency amplifies the regulatory responsibility of secretaries of state.
But state requirements vary. Some areas take a hands-off approach and don’t mandate nonprofits register with authorities. Inconsistent policies increase the watchdog duty of volunteers and board members, who may lack the expertise and authority to raise alarms.
These issues allowed mismanagement to fester at Interfaith, leaving many wondering: How did the shelter stay open for so long?
The answer is simple to Don Weaver, president of the South Carolina Association of Taxpayers, a group that advocates for efficient government spending.
“Two words,” Weaver said. “Poor oversight.”
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Stormy history
Interfaith got off to a prosperous start after its 1991 incorporation. Businesses and government grants funded the shelter. Clothes drives and community fundraisers bolstered reserves.
Nancy Cook — a licensed professional counselor who specializes in mental health and addiction treatment — took the helm in the mid-1990s. Under the direction of Cook, who later served on the Charleston County School Board, the shelter’s reserves surged.
Revenue topped $90,000 by 1997. By 2009, it reached nearly $400,000, much of that money coming from government agencies.
Nancy Cook mug.JPG
Nancy Cook, then-executive director of Good Neighbor Center, photographed at the homeless shelter Dec. 3, 1996, in North Charleston. File/Staff
File/Staff
A $165,000 grant from the VA in 1997 helped the shelter turn an abandoned motel into transitional housing for veterans. Interfaith received $12,000 in 2006 from a school district trust fund, and the city of North Charleston contributed $25,000 in 2008.
Charleston County government chipped in $26,000 two years later. And a VA per diem grant program supplied the 32-bed shelter $33 per bed each day as of 2012; that program funded food, utilities and other necessities for residents.
All told, government grants and individual contributions increased nearly five-fold between 1997 and 2010, growing from $90,000 to around $480,000. Veterans told The Post and Courier they were pleased with their temporary lodgings.
On paper, the shelter was thriving — tax forms show it collected hundreds of thousands in government aid and private contributions. But red flags shadowed Interfaith from the start.
The same year the shelter landed the VA grant, it was denied a $50,000 annual grant from the state to house and employ homeless people. The reason for the denial remains unclear. Challenging years followed as Interfaith spent over $17,000 more than it earned in 2001 and struggled to break even in 2002, informational returns show.
Management concerns arose, too, including among volunteers. When Arthur Rooney Jr., a retired U.S. Air Force major general, began volunteering at the shelter sometime after he retired in 2008, he sensed veterans liked the lodgings, but irregularities stood out. He never saw board members visit and was concerned that construction of “the new facility had ground to a halt.”
“It just seemed to me the place needed some increased oversight,” Rooney recalled.
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Vietnam veteran Donald Gordon in his room at the Good Neighbor Center in North Charleston on July 20, 2009. File/Staff
File/Staff
To correct the problems, he agreed to lead the shelter’s board — on the condition he could replace current members with people “passionate” about helping veterans. But others opposed his proposal.
“As I recall, that idea was nixed,” he said.
Boards are supposed to check nonprofit leadership, said Cinthia Schuman Ottinger, deputy director for philanthropy programs at The Aspen Institute. Ensuring an organization follows the law and hews to its mission are among the responsibilities of these volunteers, explains BoardSource, an organization that advises nonprofit boards.
But at Interfaith, board members weren’t always deeply attuned to the organization’s operations.
Michael Vaughan was a board member in the early 2000s, when he also donated screen doors to the shelter from his North Charleston building materials store. He recalled attending only a few board meetings.
“I definitely didn’t have anything to do with the financing,” he added.
One member was especially close to Cook. Mike Collins was listed on insurance forms as Cook’s husband, The Post and Courier reported in 2011. (Cook’s attorney at the time told this newspaper Collins was her fiancé.) He served on the board for at least five years.
But some former members, when approached by the newspaper in August, weren’t aware that IRS reports listed them as board members over the years.
“President?” said Shannon Praete, incredulous after learning informational returns identified her as such in 2006 and 2007. Praete is the grants administrator for the city of North Charleston. She had no idea paperwork listed her as board leader.
“That is news to me,” said Billie Girardeau, upon learning she was listed as Interfaith’s treasurer in 2006, 2007 and 2008.
Girardeau said she was Interfaith’s bookkeeper from 2005 to 2011 and “didn’t see anything unusual” on bank statements. “I just recorded what went through the bank,” said Girardeau, a tax preparer based in Greenville.
Regulators couldn’t have resolved the board member confusion. The IRS isn’t responsible for confirming board members listed on documents are actually serving.
SECONDARY Good Neighbor Center
Good Neighbor Center is a 32-bed shelter for homeless veterans in North Charleston. The VA halted payments for construction, leaving the expansion in limbo. File/Grace Beahm Alford/Staff
Grace Beahm
Belated scrutiny
It wasn’t until 2010 that regulators took a hard look at the shelter. That scrutiny came after The Post and Courier reported that between 2007 and 2009 Cook had doubled her salary to nearly $130,000 at the height of the Great Recession.
Oversight ramped up. The state’s Department of Social Services launched an investigation into Interfaith for alleged food stamp fraud, and the VA in late 2010 audited the shelter. It’s unclear what became of the DSS probe, but the federal audit proved problematic for Interfaith.
The audit by the Veterans Administration revealed Cook spent $122,000 in VA money earmarked for homeless veterans, including some on ”personal incidentals, repairs to a personal vehicle, fundraising, (and) advertising.” She spent chunks of government money on clothing at upscale King Street boutiques, pricey meals at restaurants and rent at her private-practice office, according to financial records The Post and Courier obtained in 2011.
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Auditors also found Cook used money from the VA grant to pay for health insurance premiums for Collins, her fiancé and board member.
She was fired in May 2011, but her downfall dealt Interfaith a bruising blow. In November, the VA Central Office halted payments on a $542,000 capital improvement grant to the shelter, The Post and Courier reported. The department terminated the shelter’s per diem funding in 2013, according to a VA spokesperson.
Not all VA-funded programs must secure outside audits. The department’s oversight office conducts assessments to determine which grant projects will receive fiscal reviews, a VA spokesperson said. But federal regulations stipulate only organizations that spend $750,000 or more annually in federal money must secure their own audit. Interfaith appears to have received a fraction of that sum, according to financial filings, which would have exempted the shelter from that stipulation.
The VA in 2011 demanded repayment of the sum Cook siphoned. It’s unclear if the shelter returned the money. No criminal charges were filed.
Bobby Knight, whose parents founded Interfaith in the 1990s, had supplanted Cook as leader by 2012. The board was then almost entirely replaced.
Knight’s tenure brought about a new era of uncertainty. The free-spending executive director was gone, but problems persisted.
The operation struggled to fill even half of its 32 beds. And as construction projects stalled, veterans slotted for the eight partially renovated rooms were left in limbo.
Veterans shelter stuck in middle
Veterans shelter stuck in middle
Renee Dudley
With the shelter on the ropes, Knight tried to rebrand the operation as a combination shelter and cheap-stay boarding house. Pay a $120 “donation” for a six-night stay, promised one ad. It’s unclear how well the strategy fared.
Sometime around Knight began playing a prominent role at the shelter, former state Sen. Mike Rose learned of problems at Interfaith. He recalled speaking extensively with Knight and came up with needed changes. Rose couldn’t recall his proposals “specifically,” nor the year in which he spoke with Knight. But he remembers suggesting “the management needed to change.”
So the senator directly approached Knight. Would he implement the changes?
Knight, who died in 2022, refused, Rose said.
Rose also discussed the facility with a VA official. But the agency, the shelter’s benefactor, told Rose its hands were tied.
“We were stuck,” he recalled. “I just left and abandoned the project because there was no way I could get it fixed.”
The shelter hobbled along for years. In 2017, city inspectors deemed the unfinished 14-bed expansion a “risk to public safety.” The city then asked the shelter to bring in a structural engineer to conduct a building assessment.
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The former Good Neighbor Center in North Charleston on April 17, 2023. File/Grace Beahm Alford/Staff
Grace Beahm Alford [email protected]
The engineer’s determination? Interfaith was in “excellent shape.”
In the end, a tenant complaint instigated the January 2023 inspection that shuttered Interfaith. It exposed a litany of concerns: crumbling bathroom walls, exposed wiring and pipes, a shaky heating system, bugs and rats.
It was also the first city review of the building in years.
What ifs
It’s hard to know if government regulators could have prevented Interfaith’s demise.
Weaver, the state taxpayer association president, thinks government agencies should scrutinize the books of organizations that receive public money. If those audits reveal impropriety, prosecutors should pursue cases against those responsible, he added.
An audit isn’t required for all nonprofits that apply for grant money in Charleston County. The county receives federal funds to distribute to local organizations that offer affordable housing to low-income residents, said Gail Carson, who helps manage the program. Applicants must submit a program budget, an IRS letter confirming tax-exempt status and letters of support substantiating individual contributions, among other financial documents.
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As part of the vetting process, organizations that spend over $750,000 annually in federal awards must secure an outside audit, a county finance officer said. Groups that spend less are exempt from that requirement, though they must collect records for review by federal officials. Interfaith got $26,000 from the county in 2010; that year, the nonprofit’s expenses topped $490,000 — less than the current audit threshold. The shelter’s expenditures never topped $750,000, forms filed with the federal government show.
Carson declined to comment on the vetting process in 2010.
In the city of North Charleston, which awarded Interfaith a grant, a scoring committee evaluates grant applications. Recipients get reimbursed after submitting documentation, said Dawn Henry, who oversees the city’s community development block grant program. If the city reimbursed Interfaith, it must have submitted the proper paperwork, Henry postulated.
Another check on nonprofits is the secretary of state. Organizations in South Carolina that solicit money for charity must submit an annual registration statement and financial report to the office. The state posts these financials to a searchable online database.
CROP walk.jpg
Hundreds of walkers participated in CROP (Christian Rural Outreach Program) Walk in November 1996 to raise awareness and money for hunger relief. The goal that year was to double 1995′s fundraising amount of $10,000. Funds raised were to go to Crisis Ministries, Low Country Food Bank, Catholic Charities Neighborhood House, Lutheran Social Service, North Charleston Good Neighbor Shelter and Church World Service, an organization servicing 70 countries in hunger relief projects around the world. File/Staff
File/Staff
The shelter registered with the office in the early 1990s, said Shannon Wiley, the current secretary of state’s general counsel and director of public information. But it didn’t submit annual filings about one-third of the time, she added.
For failing to file those reports, Interfaith racked up at least seven violations from the state, Wiley said. The organization belatedly filed forms after receiving most of those warnings, largely avoiding fees, though in 2019 the group was fined $200 after failing to correct a missing-form violation.
Wiley said it’s not uncommon for charities to submit late financial documentation, adding about 25 percent of charities filed after last year’s deadline.
“The question is, are they just slack or is there other malfeasance going on?” she said.
In 2022, the IRS yanked Interfaith’s tax-exempt designation after the shelter failed to submit an annual filing three years in a row. The shelter remained a tax-exempt charity for those 36 months in which it submitted no documentation.
In recent years, the IRS has struggled to oversee the growing nonprofit sector. Nonprofit employment has grown by a third over the past 15 years, and charitable donations have surged. Today, some 17,000 charities are on the books in South Carolina.
Meanwhile, the IRS lost nearly a fifth of its budget between 2010 and 2021 — and more cuts are possible.
“The IRS, in general, is underfunded and understaffed,” said Kris Kewitsch, the executive director of Charities Review Council, an organization that independently certifies nonprofits. “They don’t have the ability to have a deep level of oversight.”
Donor digging
Amid such oversight gaps, how can donors ensure their money is funding a worthy cause?
The secretary of state’s online database provides some guidance. But the tool sends messages that may confuse donors about Interfaith’s repute.
Even as the organization racked up violations for missing forms, the database listed the shelter as a business in good standing. It is, to be sure, an accurate designation: A nonprofit will remain in good standing with the secretary of state’s office until it’s dissolved, Wiley said.
At the same time, the database indicates Interfaith’s charity status is expired. If donors attempting to vet the group learned Interfaith was a business in good standing yet overlooked its expired charity status, it’s possible they may have missed an alarm — and donated to an organization flagged by the state.
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Ria Kazirskis of Summerville volunteered to serve Christmas dinner in 2008 to veterans living at the Good Neighbor Center in North Charleston. File/Staff
File/Staff
“If you’re soliciting charitable funds, you should definitely be registered as a charity,” Wiley said.
Websites like GuideStar and Charity Navigator help donors evaluate nonprofits. They aren’t always complete, however. The sites rely partially on the IRS, as well as other sources, for their data.
People looking for information about Interfaith’s revenue, expenses and employee salaries on Charity Navigator may be frustrated by the findings.
“No Data Available,” returns the search result for those categories.
Such opacity isn’t specific to third-party websites. Eleven states don’t have solicitation registration requirements or only ask a subset of charities to file paperwork with their secretaries of state, said Linnea Hopkins Mace, who helps nonprofits obtain tax-exempt status as a senior exemption specialist at Foundation Group.
The Palmetto State is one of 39 states that requires fundraising nonprofits to register. But even in states with added protections, wrongdoing crops up from time to time.
Consider the case of the New York man who registered 76 nonprofits to the same address, pocketing the donations directed at the legitimate-sounding organizations. Or the Minnesota group that allegedly bought real estate, cars and luxury vacations with millions of federal dollars intended to feed low-income children, according to the Minnesota U.S. Attorney’s office. Or the former South Carolina man who, according to the U.S. Attorney’s office, fleeced $391,000 in donations meant to underwrite Disney World trips for Marine Corps families.
To be sure, most nonprofits play by the rules, said Ted Hart, president and CEO of Charities Aid Foundation America. But mismanagement — even in isolated cases — can still curdle public trust.
It did at Interfaith, a nonprofit that’s still struggling years after the tenures of Cook and Knight.
Jesse Rivera, a member of the Exchange Club of North Charleston Project Association, obtained in March a $1.47 million judgment against Interfaith and Knight’s estate for making defamatory statements against him. Rivera moved in September to collect on that judgment by foreclosing on a lien against the shelter property.
Interfaith is now under new leadership, but old patterns appear to have persisted. Last year, the group received a violation for not submitting a financial report to the secretary of state’s office, Wiley said.
The shelter’s new president, Linda Brockway, said the organization currently has six board members. But when asked for their names, Brockway told The Post and Courier she was “told not to share them.” She also declined to comment on the lien foreclosure.
Brockway said the organization’s finances and facilities were a mess when she inherited them last year. “I’m trying to fix that,” she said in April. That month, Brockway told this newspaper she was working with the IRS to regain Interfaith’s nonprofit status.
She reiterated the same message in November.
“I’m really close to making that happen,” she said, adding that she submitted documentation to the IRS for a “second time” and expects to hear from the agency imminently.
An IRS spokesman said he couldn’t confirm whether the agency had corresponded with Interfaith.
Almost ten months after Interfaith was shut down, another North Charleston shelter has yet to fill its place.
This article was reported through a fellowship supported by the Lilly Endowment and administered by the Chronicle of Philanthropy to expand coverage of philanthropy and nonprofits. The Post and Courier is solely responsible for all content.