Lost nonprofit status causes rift in humane society

IRS records: Proper paperwork hasn’t been filed in at least 8 years

By Erin Thompson - ethompson@civitasmedia.com

The Humane Society of Madison County hasn’t been a nonprofit organization for more than five years, an ongoing issue the organization’s board and former director are blaming on each other.

The society’s tax-exempt status was revoked in May 2011, meaning the proper paperwork had not been filed since 2008, according to the IRS website.

No one seems to know exactly what led to the paperwork being overlooked.

According to former director and board member Betty Peyton, the IRS had been sending certified letters to the address of its previous treasurer, who had passed away in 2006.

But Peyton said board members were made aware of the situation more than four years ago at the same time she was made aware.

She pointed to an email from June 2012. That’s when a $25,000 grant meant to replace expensive surgical equipment was revoked after the donating organization discovered the shelter did not have the proper standing with the IRS.

In an e-mail response to the charity dated June 14, 2012, board member Cindy Phillips wrote that they had not been aware of the loss of status and would look into it.

According to Phillips, Peyton agreed to take on the project. Peyton’s husband at the time was the treasurer and the two were very hands-on with the business side of the organization, based on multiple accounts.

Phillips said Peyton told her later in the year it was being “taken care of.”

However, the “quick fix” with the IRS was taking years. It wasn’t until Peyton took her leave of absence in August that the board understood the “depth” and “duplicity” of the problem, according to Phillips.

“No one asked any questions because dogs were being fed, dogs were being adopted and dogs were getting their medicine. Everyone thought everything was fine,” said Michael Sweet, an advisory board member. “We were under the impression the process was in the final stages when it had yet to be started.”

Peyton has denied culpability, stating that that during her 15 and a half years as director, she never once filed the paperwork and it simply wasn’t under her scope of responsibilities.

“In my honest opinion, this is a board matter,” she said. “All of them should have stepped up.”

According to Phillips, the board asked repeatedly for more information on the status of things and Peyton simply would not comply. She said excuses ranged from broken printers to their accountant being out of town.

Things came to a head in August when the board told Peyton that she had until the end of the business day to produce some sort of information of where they stood with the IRS.

Peyton instead turned her keys in that day and attempted to resign, according to Phillips. The board put her on a leave of absence because, despite the tension, Peyton had dedicated herself for many years to the shelter and they hoped she would return when she was ready.

Since the organization lost its status more than five years ago, the shelter has lost out on numerous grants that would improve the quality of life for the animals. Phillips, the primary seeker of grants, estimates the shelter has missed roughly $60,000 during the years, based on how much grant money was brought in annually before 2008.

Cmmunity members are still encouraged to support the shelter, with the understanding any donations made are non-deductible.

“We didn’t do any of this to be malicious,” Peyton said. “It’s a lot of a mess. The sad thing is it’s really nobody’s fault.”

Sweet, who joined as a new member in August, indicated the blame should be shared among board members and Peyton.

“Betty pretty much handled everything and the board was pretty much a rubber stamp,” he said. “The board in itself did not do its due diligence nor was the organization set up in any appropriate way to ensure this was done right. There was no specific delegation of authority.”

“The shelter will continue,” he continued. “We just have to figure out a way to do it so when the dust has settled so something like this can’t happen again.”

IRS records: Proper paperwork hasn’t been filed in at least 8 years

By Erin Thompson


Reach Erin Thompson at 740-852-1616, ext. 1615.

Reach Erin Thompson at 740-852-1616, ext. 1615.