A charitable organization that spends 33 percent or less of its expenditure on programs compared to administrative costs is considered “highly inefficient,” Jon Holmes, Franklin County administrator, said Monday.
The Franklin County Convention & Visitors Bureau is spending 11 percent of its funding on programs and 89 percent on administrative expenditures, Holmes showed the Franklin County Board of Commissioners during its Monday study session because of worries from the board about how the transient guest tax was being used.
Transient guest tax is a tax charged to people who stay in hotels and is used to promote tourism and conventions.
The tourism bureau’s administrative overhead increases are causing concern for county officials, in part, because how the taxes are being spent. Some of the increase might be caused by the bureau’s move from a 501(c)3 to a 501(c)6 nonprofit organization in 2013, Holmes said.
Holmes showed the board that the bureau had seen increases in traveling expenses, legal and accounting expenses, employee insurance expenses, payroll, property taxes, and educational expenses, resulting in an increase of $13,720 or a 9 percent increase overall.
Program expenses, on the other hand, had decreased in 2014 by $4,331, or 20 percent.
Other problems might be the decrease in visitors to the bureau’s Visitor Information Center on East Logan Street, Holmes said, showing a calculation that said the building was seeing one visitor per hour the building is open for the entire year. When the building opened in 2002, Holmes said people he spoke to remembers 5,000 to 10,000 visitors in a year, but in 2014 the building saw 3,073 visitors.
“Quite honestly, I’m asking myself a very simple question: If I was running a business, could I exist on only one visitor or customer an hour?” Holmes said.
But while physical visits to the building have decreased, the online presence of the visitor’s bureau has increased substantially, Holmes said, showing the Facebook grew by 48 percent (to 671 likes), Twitter increased by 21 percent (to 184 followers), and the website received more than 70,000 views.
And if the organization continues to work as it has in the past year, Holmes said, he doesn’t know how it could be possible to get the visitor’s bureau to spend more than 50 percent of its expenditures on programs rather than administrative overhead.
“I kind of wonder if that building came to fruition, was built, a little too late in 2002,” Holmes said of the visitor’s bureau building. “I don’t think anybody at that time could have known that they would have a computer in their pocket that would be able to get all the information that is in there from the comforts of their [couch].”
Holmes explained some communities, Lawrence and Manhattan, are moving to spend their transient guest tax by issuing the funds directly to events rather than using a visitor information center to promote the activities.
The board has a responsibility to make sure the transient guest tax is used in the best way, Colton Waymire, board chairman, said.
“We levied the tax and it’s our responsibility to make sure it gets spent where we get the best bang for the buck,” Waymire said. “I don’t believe that’s an organization that has an 89 percent administrative overhead and 11 percent going to services. It’s not responsible of this board to spend tax dollars that way.”
Peach Madl, visitor’s bureau board member, said some of the statistics Holmes presented were not accurate, and argued that the board needs to forge better communication with the visitor’s bureau. She also said the tourism board did not know the visitor’s bureau had moved from a 501(c)3 to a 501(c)6, although Holmes referenced documentation from the state that said the organization had switched over.
“Something happened over that last few years, when there is an issue or something wrong, we’re not hearing any communications,” Madl said. “So we don’t know there is a concern to address.”
Madl said the personnel costs increased because a part-time employee moved to full-time focusing on social media and engagement, and argued the cost of the employee should be considered advertisement, which is part of a program expenditure. Holmes said because the increase was related to a personnel move, the expenditure is still considered an administrative cost.
The board asked Holmes to find more information relating to the organization in several areas and to present it to the board in the next study session before any decisions regarding the organization are made.
Dylan Lysen is a Herald staff writer. Email him at firstname.lastname@example.org Follow him on Twitter at @DylanLysen