Staff of the Office of Protocol told Bay Crossings
that these events were not “Official” Fleet Week events, as they
were not sponsored by the “Official” San Francisco Fleet Week
Committee, Inc., a registered nonprofit 501(c) 4 corporation. Thus,
as unofficial events, paid by his community to honor sailors
visiting his town, it was somehow inappropriate for the Mayor to
attend.
Bay Crossings learned that the Mayor did enjoy the
“Official” pavilion where he watched the air show and later visited
a disaster relief display. That, and confirmation that he was late
to a meeting to honor the remaining Captains (many had sailed with
the conclusion of Fleet Week activities) was the sum total of his
involvement.
And this is where it gets complicated. You see,
according to the City’s own Grant for the Arts, Fleet Week is not an
officially sponsored event. “Official” events are those that are
managed in part or completely by the City, according to a
spokesperson for the department. Since the unofficially “Official”
Fleet Week Committee handles all the event management, the City
considers it an unofficial event, although it does contribute some
$30,000 through two of its agencies.
It then gets more interesting. Somehow, the
“Official” three-person board, Edward Leonard, Dwayne Oslund,and
Joseph Zaccone, put on an event that costs over $400,000, which
brings a gigantic air show to town along with lots of Navy ships and
more than a million people. They do this by contracting out most of
the work to a company that specializes in putting on air shows, Air
Show Network.
According to the Fleet Week Committee’s filings with the Registrar
of Charitable Trusts obtained by Bay Crossings, Air Show Network (ASN)
is also a fund-raiser, earning some $44,000 in fund-raising costs
paid by the Fleet Week Committee in 2003 alone. And, according to
the filing, some $298,000 was raised by leased chalets (tents),
displays, seating, attractions, and sponsors, which in 2003 included
AT&T.
So the fund-raising costs of 16.5% look pretty
modest, given the overall income. Yet according to Edward Leonard,
president of the Fleet Week Committee, most of the expenses are paid
to Air Show Network. Thus, with the exception of the City’s $30,000
contribution, apparently most of the income and expenses are derived
from and end up in one place–Air Show Network.
Untangling the expense side of this equation would
be a lot simpler if the Fleet Week Committee filed the required
Schedule A (to Form 990) with the Registrar of Charitable Trusts,
since in this schedule, nonprofits are required to report a payment
to a contractor of over $50,000. According to the Registrar, this
schedule should have been filed for both 2002 and 2003, but the
agency did note that there were some limited exemptions to this
requirement. Based on Edward Leonard’s observation that ASN
basically managed the show, we can total up payments to them in the
neighborhood of $220,000 or more.
Thus, the nonprofit, Mayor-approved unofficial
“Official” Fleet Week Committee earns the majority of it funds
through its contract with ASN and in turn, pays the majority of its
expenses to the same entity, including a $44,000 fund-raising fee.
This, according to a charitable trust CPA, who asked not to be
identified, should raise some red flags with both the IRS and the
Registrar of Charitable Trusts as it creates the appearance of a
private company sheltering income through the nonprofit
(particularly with no Schedule A provided). Bay Crossings did ask
the Fleet Week Committee for a copy of the Schedule A on the
assumption it was provided to the IRS and was told the Treasurer was
away on holiday and thus it would be unavailable for a while.
Income sheltering could happen, explains the CPA,
when there is income, for example, for Chalets (tents) of $40,000
and rental cost for tents of $14,000, with the difference being the
profit, theoretically donated to the nonprofit Fleet Week Committee.
Presumably, ASN provides the tents, rents the tents, collects the
money that is then paid to ASN for other services, such as the
General Production Management Fee of $62,500, $26,000 for sanitation
and cleaning, $44,000 for fund-raising, and other costs. But to ASN,
assuming the $26,000 “profit” was a charitable donation to Fleet
Week, then it would pay no state taxes on money paid to itself.
Bay Crossings tried to reach ASN using the contact
information on Fleet Week’s 2003 Form 990, but the phone had been
disconnected and the address was listed as “unknown.” However, ASN
has an active web site with two phone numbers. One is an 800 number
for buying tickets and it hangs up on the caller, simply saying
“good bye.” The second is for the offices, but despite repeated
attempts, no combination of the phone tree would deliver either a
live person or a place to leave a message. E-mail went unanswered.
![](images/Band.jpg) |
United States
Marine Corps Band |
ASN is apparently patient about being paid, as in
2003 there was an $86,000 deficit for the full operation of Fleet
Week, added to a $15,000 shortfall from 2002. Edward Leonard said
that some creditors, such as ASN, were understanding and that some
income arrives after the end of the reporting period so that things
weren’t as bad as they looked, from a cash-flow perspective.
Our own Fleet Week Committee can be compared with
our neighbor down south in San Diego, where they run a $680,000
Fleet Week with 18 board members (compared to our three) and manage
to file a Schedule A, showing no payments to any contractor in
excess of $50,000. According to several sailors, who asked not to be
identified, Fleet Week is a big deal in San Diego, with lots of
events especially designed for the sailors. Here in San Francisco,
the San Francisco Fleet Week Committee funds only one event during
the week and that is a “meet and greet” with the aviators where
usually paid public attendance is required.
Citizen volunteers, who on their own sponsor
various activities for the sailors, fill that rather large hole for
sailor events. There are usually events by the Oakland and Marin
Navy Leagues, Alameda Sheriff’s Department Bar-B-Que (led by the
largely unheralded Lou Lozano), and Fior D’Italia’s generous
dinners. This year, the somewhat snubbed Friends of the Fleet
provided the Marine Corps Band to play for San Francisco and also
for veterans at the Home of the Brave, transportation so that
sailors could volunteer to visit sick children in San Francisco and
a school in Alameda, and the previously mentioned hosted lunch and
dinner to honor the sailors, held at City Hall.
![](images/Marine.jpg) |
Band Members at the Home of the Brave |
Bay Crossings called Mrs. Anna Falche, a driving
force behind Friends of the Fleet, and asked about the level of
support the group had received from the City. She pointed out that
two of her events were held at City Hall and said her group had
always gotten the full support Mrs. Charlotte Schultz, the head of
the Mayor’s Office of Protocol. When asked about rumors of problems
with the young staff members, she had no comment and when asked
about being snubbed by the Mayor, she laughed.
She pointed out that many members of Friends of
the Fleet were strong supporters of the Mayor in the last election
and that in no way would they have been intentionally ignored. “The
Mayor couldn’t attend,” she said, “because he obviously had other
duties to handle.” She went on to say that the important thing was
that Fleet Week continues to be a success and that Friends of the
Fleet was there to support the Navy and the Armed Forces.
The Fleet Week Forensics are not over. Next month,
we will tackle the mystery of the missing Schedule A, look more into
the relationship between the currently unreachable Air Show Network
and the Fleet Week Committee, and find out why a radio station no
longer broadcasts the air show.
You can contact Guy Span at info@baycrossings.com.