Charities claim issues with organizer of beer festivals

The suds flowed freely from taps and thousands of people lined up to get a taste.

Tacoma charities thought they would make thousands of dollars for their causes through two beer festivals organized this year by a local company. But in the weeks and months that followed, the profits dissipated like foam on a warm Pilsner.

Now Tacoma charities are calling foul on the practices of Union House Productions, which has organized the Tacoma Craft Beer Festival since its inception five years ago.

But it turns out, the nonprofit organizations themselves could be in trouble for taking a back seat to Union House.

The festival, by outward appearances, has been a success. It moved from the Thea Foss Waterway to Cheney Stadium in September to accommodate a bigger crowd.

Roxi Wolfe and Bennett Thurmon, owners of Union House, also launched the Big Beer Festival in February.

YWCA Pierce County officials thought the Big Beer Festival would net more than $13,000 for their mission to help domestic violence victims. All 1,200 tickets for the February event had been sold for an average of $22.50 each before the doors opened at Foss Waterway Seaport. YWCA staff were ecstatic.

But the check never arrived. Weeks turned into months. Phone calls went unanswered, YWCA officials say.

After the YWCA threatened to call the state, a check arrived in September – for $1,078.

“It feels like we were used in a lot of ways,” Jessica Gavre, the development director for YWCA, said of Union House. “They had a lot of reasons why they couldn’t pay us.”

So, why did it take so long to pay the YWCA?

Wolfe and Thurmon say they are having trouble paying the bills and aren’t sure if their beer festivals will continue.

“We had tremendous cash flow issues,” Thurmon said. “We had to wait to get sponsor money from the (September) Tacoma Craft Beer Festival to pay them. I paid them the minute I had money to give them.”

The YWCA is not the only nonprofit group that feels duped. Representatives of every other nonprofit organization that lent its name to Union House’s Tacoma beer festivals in the last five years – Tacoma Historical Society, Boys & Girls Clubs of South Puget Sound, Emergency Food Network, American Heart Association and the now-defunct Boots ’n’ Breeches – said they received far less than promised or nothing.

None of them suffered insurmountable setbacks because of the missing money. But the broken promises left fewer dollars to spend on their causes.

In 2012, Tacoma Historical Society was told it could receive up to a quarter of its annual budget from the beer festival.

“We were kind of high-fiving when we heard from them it was likely our nonprofit would receive up to $25,000,” said Bill Baarsma, former Tacoma mayor and board president for the Tacoma Historical Society.

Instead, the group ended up with $5,227 – an amount Baarsma said he and others were happy with.

“We thought it was going to be a major fundraising event,” he said. “It turned out to be an OK fundraising event.”

In September, Thurmon told The News Tribune that his Tacoma beer festivals had generated more than $50,000 in donations to public charities.

But when asked last week for an accounting of those donations, Thurmon produced a document that showed only $44,000 in donations – and even then, his accounting varied widely from what the charities say they received.

For instance, Thurmon said he generated $30,000 for Boys & Girls Clubs of Puget Sound in 2011. Jinnie Hanson, spokeswoman for the Boys & Girls Clubs, said $25,000 of that was raised through the nonprofit’s own efforts at attracting sponsors, not as proceeds from the festival itself.

Thurmon also said Union House gave Boots ‘n Breeches $7,372, but Sandra Boe, former program director for Boots ‘n Breeches, provided financial documents that show the charity only received $1,749. While Union House fronted the charity with $13,249, much of that money was used to buy beer for the festival-goers, documents show.

Here’s the twist: State regulators say they find no fault with Union House. It didn’t break liquor laws, but the nonprofits might have.

Charities, not Union House, are responsible for ensuring festivals where alcohol is served are operated for the benefit of nonprofits and not to enrich private businesses. Mikhail Carpenter, spokesman for the state Liquor Control Board, said charities who sponsor these events – and obtain the liquor permits for them – should be in charge of the finances.

Jacki Berreth, an accountant who is a former volunteer of Boots ’n’ Breeches, said the charity partnered with Union House Productions during the first Tacoma Craft Beer Festival in 2009.

Berreth said Union House ran all of the festival’s income through Boots ’n’ Breeches and then withdrew most of it, giving a percentage of the ticket sales to the charity.

Carpenter says that cash management scheme runs afoul of state law.

“The charity should’ve been holding the money,” he said. “The charity shouldn’t have delegated that out to somebody else.”

According to state law, charities are supposed to receive 100 percent of the profit from beer, wine or spirits festivals, which are operated under a “special occasion” license. Service providers are allowed to charge “reasonable operating costs.”

Carpenter said the charities should approach an event planner or promoter, not the other way around.

“By allowing (companies) to collect part of the proceeds or taking a cut of the proceeds, that violates the license. That’s against the law,” Carpenter said. Charities that relinquish control to third parties risk losing their ability to hold future fundraising events that require liquor permits, he said.

Carpenter said the Liquor Control Board plans to increase its efforts to educate nonprofits after hearing of charities’ experiences with the Tacoma Craft Beer Festival.

Gavre with the YWCA said the organization didn’t realize how much they were really responsible for in the Big Beer Festival, and they are unlikely to host another one.

“(A beer festival) doesn’t even connect with our mission or anything,” she said “It seemed to be a challenge to be on the hook for everything and have someone else be in total control of it.”

At least one nonprofit – the Boys & Girls Clubs – tried to be more involved in the beer festival. Union House rebuffed its efforts.

“They wanted to have more control over it,” Wolfe said. “At that point I should say to them, ‘then you should put on your own beer festival.’ … They didn’t have to do anything except sit back and wait and be there as a presence (to receive donations).”

Emergency Food Network’s development director Jeff Kline said his charity partnered with Union House in 2010 and 2013. Emergency Food Network didn’t receive anything the first year, but decided to try again in 2013, this time with a signed contract. The charity received about $400 for staff time this year, Kline said.

“Do they have a lot of exuberance year after year and saying nonprofits will make a lot of money? Yes,” Kline said of Thurmon and Wolfe. “Does it fail more often than not? Yes. Would I recommend any nonprofit get involved again? No, just because of their track record.”

The American Heart Association, which was listed as a co-beneficiary for the 2013 Craft Beer Festival, said it has heard nothing from Union House Productions since the event.

“We hope that they’ll come through,” said Francesca Minas, spokeswoman for the Heart Association.

Wolfe and Thurmon say they don’t know if there will be another Tacoma Craft Beer Festival. Thurmon said they don’t make much money on them anyway.

Thurmon said his cut for the September festival was supposed to be $20,000, but he ended up only taking $2,000. Of the 8,000 people they predicted would show at Cheney Stadium, only 2,900 did.

“I don’t know that we can keep going forward anymore,” Thurmon said. “... I have $22,000 worth of invoices on my desk right now. As of right now, I don’t know. It’s 50-50.”

Kate Martin: 253-597-8542 kate.martin@ thenewstribune.com @KateReports