Pride flag funding problem?

The Hillcrest Community Foundation, the group in charge of collecting donations for Hillcrest's Pride Flag monument, may soon be the subject of an investigation by California's attorney general's office.

According to an email obtained by the Reader, the city auditor's office is sending a complaint to the attorney general's Charitable Trusts Section for "soliciting donations while it was suspended with the Secretary of State, had no bank account in place, and had no meetings for several years."

Fundraising for the monument began in 2011. At the time, the Hillcrest Business Association, the group that administers the business improvement district was collecting the donations and in charge of organizing fundraising events such as the Amazing High Heel Race. But questions emerged regarding whether the business association is allowed to collect donations for charities as well as if construction and maintenance of the monument benefits businesses in Hillcrest's designated business district.

In recent months, some community members have accused the association of back-room dealing and changing the association's bylaws in order to keep troublemakers from gaining a seat on the board of directors.

News of a potential investigation only complicates matters.

It is hard to deny the Hillcrest Community Foundation's involvement in the charity drive.

In 2013, the *San Diego Gay and Lesbian News,* whose publisher Johnathan Hale serves as a boardmember for the business association, printed an article soliciting donations for the Pride Flag monument. The article directed potential donors to make checks out to the Hillcrest Community Foundation.

That was problematic for several reasons. As previously mentioned, the state's franchise tax board had suspended the organization for not filing all of the required paperwork. The foundation did, however, file renewals every year since 2003, listing their assets and revenue as zero for all years.

Benjamin Nicholls, Hillcrest Business Association's interim president, says the decision to put the foundation in charge was a mistake, one that was quickly addressed.

"Originally the Hillcrest Business Association talked about partnering with Hillcrest Community Foundation,” said Nicholls. “Folks would make donations directly to the foundation as the Hillcrest Community Foundation was at one point a 501(c)3. But the foundation had been dormant for six or seven years and they were in the middle of reviving the organization, which complicated things in regards to donations. So the donations went straight to the Hillcrest Business Association."

Doing so meant that donors would not be allowed to claim the donations to the IRS, due to the state laws prohibiting corporations from accepting charitable trusts.

It was a minor technicality, according to Nicholls. He was not aware of any complaints, and the donors were well aware of the situation.

Glenn Younger, the president of the Hillcrest Community Foundation, says the state has the paperwork. Regardless, the foundation didn't collect any donations.

"Looks like the state is slow on the changes to their own database of information," writes Younger in an August 12 email.

"As [Nicholls] mentioned we have not been involved in any fundraising yet. No money in or out. A total voluntary effort so far.”

Mat Wahlstrom remembers it differently.

Wahlstrom, co-owner of Roberts Electric Service, says he wrote his check out to the Hillcrest Community Foundation. Two months later the check was cashed, presumably by the Hillcrest Business Association. He was then informed that he could not claim the donation on his taxes.

"If in fact no one complained, perhaps it is because, unless they were at the April 15 [business association] board meeting, no one was told. Nicholls was not at this meeting or even involved in the [Hillcrest Business Association] yet at this point. But you've got to give him credit: he never varies from his strategy of attempting to isolate critics in order to dismiss criticism."

Wahlstrom raised the issue to mayor Kevin Faulconer during a meet-and-greet event in Hillcrest.

"Did we complain? Yes, we did, and very publicly. Which reminds me, four months have passed and still haven't heard from Hizzoner about our plea for help."

Nicholls denies any wrongdoing. "We can show all the money that went to the pride flag. Our role is to promote and improve Hillcrest's business district, We feel the monument definitely fits within the scope of what we are called to do. Hillcrest is the heart of San Diego's LGBT community and recognizing it as such is important for everyone, most of all the business community."