HAMLET — Mayor Bill Bayless will ask city council members to discuss Tuesday whether volunteers should be allowed to campaign for candidates while working the Seaboard Festival.
Several volunteers — including council members David Lindsey and Wendy Massagee — wore council candidate Stephanie Corey Dixon’s pink-and-green “Vote for the Girl” hats or shirts, or both, with their day-glo yellow Seaboard vests on Sept. 28. The shirts were not immediately visible, but the hats were.
Dixon was among the losers in Tuesday’s election, which favored incumbents Jesse McQueen and Eddie Martin.
“The committee does a great job on the festival,” Bayless said Thursday afternoon, after the council agenda was posted. “Nobody wants to stop the Seaboard Festival, and the city does not want to take over the Seaboard Festival,” he said.
“To me, it’s not an adversarial position, (but) I think we just need to sit down and work out some issues about people working on the committee.”
Bayless volunteered for the Seaboard himself several years ago, he said, and “we didn’t do anything like that. We don’t know how it got to that.”
The Seaboard Board is a 501(c)(3) organization, a federal designation that means it is a charity that need not pay taxes. To retain that status, Seaboard representatives must toe a narrow line in election years.
According to the National Council of Nonprofits, “a charitable nonprofit promises the federal government that it will not engage in ‘political campaign activity’ ” either supporting or opposing a candidate for elective office.
“If it does (engage in political activity), IRS regulations mandate that the charitable nonprofit will lose its tax-exempt status,” the nonprofits council says on its website. Charitable nonprofits may do such things as engage in voter-registration drives and the like — as long as they remain nonpartisan.
The city council could vote to inform the IRS of a suspected breach of its rules for nonprofits, as could anyone else who took umbrage at seeing Seaboard Festival volunteers in campaign gear.
On Thursday evening, Lindsey said he was unaware of the IRS prohibition against campaigning and never would have jeopardized the festival’s 501(3)(c) status, had he known.
“This is the first I’ve ever heard of that,” he said. “This is something the committee (also) didn’t know. No way would we ever jeopardize (the Seaboard’s tax-exempt status).
“We’ll apologize, and it won’t happen again.”
Lindsey objected to the issue’s becoming the topic of public debate.
“It should have been a private conversation and not brought up in a council meeting,” he said. “But if that’s the way council’s going to handle it … All’s I can say is I’m sorry.”
Council member Massagee could not be reached for comment Thursday evening.
Bayless said he didn’t know whether the council ultimately would lodge a complaint with the IRS.
“That’ll be something they’ll have to have a discussion about,” he said.
If it received such a claim, said spokesman George Jeter of the N.C. Secretary of State’s Office — with whom 501(c)(3) organizations must register — the IRS could do one of three things.
“(It could) either say, ‘Don’t do it again’,” levy a fine or revoke the festival’s tax-free status, he said.
Council member McQueen also has asked that Tuesday’s agenda include “continued discussion of Foundation for The Carolinas” grant.
Last August, both the Seaboard Festival and City of Hamlet applied for grants through the foundation — the Seaboard, for festival support and Hamlet, for playground equipment. The Foundation for The Carolinas manages grant money for several entities, and the two grant requests did not compete for the same pot of money.
When he first brought up the issue of a potential conflict, McQueen said he thought council member Lindsey should not have been involved with both grants.
Later, he said he thought Lindsey should have recused himself from the city vote on the playground — which included support for a grant application — because Lindsey knew about the Seaboard application and stood to gain financially if that grant went through.
If the Seaboard grant were approved, McQueen said, Lindsey and his wife, Kim — then Seaboard chair — could improve the property and later donate it to the festival. That, McQueen said, would let the Lindseys claim a tax credit, something he said constituted a conflict for a city official.
McQueen could not be reached for comment. Several attempts at contact ended with busy signals; a message on another phone was not returned.
Bayless said Thursday that he was aware of McQueen’s additions to the agenda.
“It’s just going to be a bad night Tuesday, I’m afraid,” he said.
Reach Christine Carroll at 910-817-2673.