Tuesday, January 31, 2012

San Diego Comic Convention office in La Mesa meets deadline for business license, but is exempt from fees as a 501(c)(3) nonprofit charity

Comic-Con—With Net Assets of $7 Million—Pays No City License Fees
San Diego Comic Convention office in La Mesa meets deadline for business license, but is exempt from fees as a 501(c)(3) nonprofit charity.
By Ken Stone
La Mesa Patch
June 15, 2011

Avoiding a cliffhanger ending, Comic-Con met a city deadline of June 2 to submit an application for a business license—after operating on Allison Avenue five years without one.

According to city records, the San Diego Comic Convention—with offices at 8330-8340 Allison Ave.—is doing business as “Comic-Con International & WonderCon & APE.”

Its business license was issued May 25.

But Jolene Cayas, the La Mesa’s business license officer, said Comic-Con paid no fees with its license.

That’s because the operation—which prepares for the world-renowned July convention at the San Diego Convention Center—is considered “exempt” from fees since it is legally a nonprofit organization, meeting IRS rules for tax-exempt status. It pays no state or federal taxes.

Comic-Con—a 501(c)(3) organization—files annual Form 990 reports listing its revenues, expenses, director and employee compensation as well as the mission that qualifies it as a nonprofit.

According to the latest Form 990 available—filed in July 2010 for the tax year ending Aug. 31, 2009—Comic-Con “is a nonprofit educational corporation dedicated to creating awareness of, and appreciation for, comics and related popular art forms, primarily through the presentation of conventions and events that celebrate the historic and ongoing contribution of comics to art and culture.”

Comic-Con had revenues that year of $9.17 million and expenses of $8.21 million for an “excess … for the year” of $955,456, according to IRS filings (attached).

The operation’s executive director, Dona Fae Desmond, made $84,742 that year, averaging 50 hours a week. Among its directors, President John Rogers was paid $18,000 for workweeks averaging 9 hours. Vice President Robin Donlan made $14,418 for 14-hour workweeks.

Comic-Con has had nonprofit status since 1975, which is well-known.

But since nonprofits generally have some charitable purpose, Comic-Con has raised eyebrows for years.

Says the Internal Revenue Service page on such nonprofits:

Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. ... The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual.

A San Diego Union-Tribune report of July 27, 2007, quoted Sandra Miniutti, a vice president for Charity Navigator, as saying: “It is a real stretch to call a group whose purpose is to promote comics via a highly commercialized event a charity. How does that benefit the greater good of society?”

The same article, by John Wilkens, quoted Daniel Borochoff of the American Institute of Philanthropy as saying: “The people who appear to be profiting are the pop-culture purveyors who have a great marketing opportunity there.”

David Glanzer, director of marketing and public relations for the convention, told the U-T in 2007 that being a charity “allows us to return any money made back into our event.”

He told Preston Turegano the same thing four days earlier in a San Diego Business Journal article: “Whatever we have left over after expenses always goes back into the organization to help prepare for the next convention.”

Comic-Con had about $3.8 million in net assets in 2007, according to the U-T report.

In its latest filing, say tax filings, Comic-Con’s net assets were $7.78 million.

La Mesa’s business license fee is $35 plus $3 per employee.