Strive faces series of hoops before it can dissolve

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Strive faces series of hoops before it can dissolve

By RACHEL HEATON
rheaton@beaufortgazette.com
Published Monday, January 16, 2012   |  722 Words  |  

Strive to Excel, the beleaguered mentoring program at Hilton Head Island High School, has ceased operations, but before it can formally dissolve, its officials must follow procedures described in South Carolina law.

And because it is the subject of an investigation by the S.C. Secretary of State and an Attorney General's Office inquiry, Strive is likely to be watched closely each step of the way, according to one nonprofit consultant.

"What happens in most nonprofits, they say 'To hell with it' and just walk away," John Rouff said. He said it's not uncommon for nonprofit staffs and boards to cease operations without ever legally disbanding.

"(Strive has) the attention of the attorney general, so they probably are going to be forced much more so than most entities to jump through the hoops," Rouff said.

The process begins with a board vote to dissolve.

Strive board secretary Tom Gardo said Strive's board has met once since it decided last month to fold on New Year's Eve. However, he said last week he is not sure when the board will reconvene.

Gardo said in an email Thursday that the Strive board will follow all necessary steps to legally dissolve. However, it's not clear if it has taken a formal vote to disband -- several attempts last week to reach Gardo by phone were unsuccessful, and he has not responded to an email request from The Island Packet and The Beaufort Gazette to review meeting minutes.

The nonprofit group would have to give the Attorney General's Office written notice that it intends to dissolve and also deliver articles of dissolution to the Secretary of State, according to the state's nonprofit corporation act.

Both offices said last week Strive has not filed that paperwork.

According to the nonprofit corporations act, Strive also would have to notify anyone with claims against it or run a notice of its dissolution in the newspaper. Once creditors are paid, remaining assets must be given to other nonprofit organizations, Rouff said. However, those assets cannot be transferred until 20 days after the written notice is filed or the attorney general approves the dissolution.

It's not clear how much money Strive has on hand or how much debt the organization carries.

Strive would have to submit a list of organizations that received its assets to the Attorney General's Office, which likely would follow up to ensure those groups are active charities, Rouff said.

That's what happened when Columbia-based S.C. Fair Share dissolved last year. Rouff was the program and research director for that nonprofit group, and he said dissolution took several months. Although the group's office closed in May, it wasn't legally dissolved until December.

Strive must also file tax forms with the IRS and the Office of the Secretary of State.

Gardo said Jan. 6 that board treasurer Robert Trask has met with tax attorney Bob Arundell, who has prepared Strive's taxes, to finish Strive's returns, though he would not say when those would be filed. The organization has a three-month extension to file its 2010-11 fiscal-year taxes, which were due in October.

According to the IRS's website, Strive's 2011 tax forms would be due about five months after it shuts down. That form would need to indicate Strive has closed and provide details about who received its assets.

Follow reporter Rachel Heaton at twitter.com/HomeroomBft.

Related content:

IRS instructions on terminating a tax-exempt organization

South Carolina Nonprofit Corporation Act

Sec. of State cites Strive for violations; AG request financial information; Jan. 6, 2012

Strive to Excel will cease operations at the end of this year; Dec. 17, 2011

Strive to Excel files for tax deadline extension; Oct. 17, 2011