The Seabrook Island Club was served a court order by the Circuit Court of Charleston County on behalf of a citizen of Seabrook Island and over eight-year club member Joseph Bauer.
Bauer filed the court order against the club due to its refusal to allow him access to its financial records.
Bauer claims SIC has refused to provide the records upon his multiple requests. The court order states that Bauer seeks only to be able to review the financial records of the Seabrook Island Club, which is a member-owned nonprofit mutual benefit corporation. Bauer claims that the Seabrook Island Club rents out club member spaces to the public for events like weddings, thereby making those spaces unavailable to paying members for the duration of the event. He also claims that renting out to the public provides the Seabrook Island Club with a profit from an outside source. As being a not-for-profit club, it is exempt from certain fees in taxes that other private for-profit clubs would have to pay. “The Seabrook Island Club is advertised on public websites as a place to hold a wedding. They charge much more for outsiders to hold their wedding there,” Bauer explained.
Bauer’s main issue with the club is that he and the over 1,000 other club members that signed a petition wanting the club to act more as a “private club,” are paying for exclusive availability of the club amenities. “The clubhouse will be closed to members so that a wedding can take place there for people who are not members and are sometimes not even renting on the island.” Bauer would like to review the financial records in order to prove that the club would break even with reasonable dues and conservative estimated spending by club members. Bauer wants to review how much of a profit the club is making by renting out space to the public, especially since, he said, “They do not pay taxes to be a for-profit club.”
“They can’t keep up with this charade as being a private club, but not operating as one,” Bauer added. Bauer wanted to make it clear that this is not a lawsuit.
As the court order states from the SC Code of Laws which govern the establishment, organization, governance and practices of clubs that are registered as the club is registered, including the rights of its members: “A member is entitled to inspect and copy, at a reasonable location specified by the Club, any of the following records of the club if the member meets the requirements of subsection c and gives the club written notice (at least five business days).
Subsection b specifically includes accounting records as among the records a member must be provided. The term ‘accounting records’ is not limited to only those summaries of accounting that the Club chooses to provide.”
Bauer pointed out that the club used to provide the records for many years at his request with no question. Bauer would be supplied records that reflected the specific spending by the club for specific categories of expense, such as advertising, web marketing, payroll by department, board entertainment, board travel, consulting fees, legal fees and other administrative and accounting expenses. No personal or private information, such as compensation to individual employees, were given.
Bauer was actually supplied this information monthly until September 2021 when it came to a halt. “I want to know why they won’t provide the records anymore,” Bauer inquired. “It is definitely a little troubling since they can’t give me a reason. We need better transparency.” Bauer is specifically requesting monthly departmental revenue and expense schedules underlying the financial statement summary (October 2021 to August 2022); accounting records showing all accounts payable for each calendar month (October 2021 to August 2022); accounting records showing monthly collections of new member joining fees and membership upgrade fees for 2019, 2020, 2021 and 2022; and accounting records showing how 50% of member joining and upgrade fees are accounted for, where those funds are held,how much of the amount collected has been paid out to resigning members as partial equity reimbursement, how much remains in the fund and where that fund is.
The Seabrook Island Club’s Board of Governors provided the following statement in regards to Bauer’s claim through the Charleston County Circuit Court: "Mr. Bauer alleges that Seabrook Island Club is holding back financial information that, in his opinion, should be made available to him as a member of the club. Since its creation in 1991, the club has fully complied with South Carolina law regarding nonprofits and our duty to disclose accounting and financial records to membership. Our books are audited each year by a nationally recognized, independent CPA firm which deals with hundreds of clubs. Those records are available to members up to a statutory and legal limit. Certain financial information, for example that of a personal nature, is withheld per the law. The club’s Board of Governors, management, and accounting staff have attempted to cooperate with Mr. Bauer’s requests in the past, and it is unfortunate that, despite our good faith efforts, Mr. Bauer continues to press for information."
