Washington Blade - April 19, 2006
Lou Chibbaro Jr

Last year, the Cherry Fund, the tax-exempt nonprofit group that produces the Cherry parties, gave a combined total of $20,000 to five gay or AIDS groups.

Last year's contributions were an improvement over 2004, when Cherry Fund officials said declining attendance prevented them from giving any money to their named beneficiary groups. The Cherry Fund gave away more than $173,000 in 2002, when circuit parties peaked in popularity in many cities.

In promotional literature, the Cherry Fund has said the well-known Cherry events have raised some $800,000 for local and national gay and AIDS groups over the past decade.

But according to records compiled by the charity watchdog group Guidestar.com, the Cherry Fund could be slapped with a fine this year by the IRS for being at least five months late in filing its required IRS 990 reporting form for 2004.

The form was due May 15, 2005, but most charitable groups are eligible for two extensions. The final deadline for the 2004 reports following the extensions was Nov. 15, 2005.

Cherry Fund officials, including chair Paul Marengo and the group's attorney, Paul Richard, did not return calls seeking comment. Marengo has said he has directed all Cherry Fund officials to refuse to talk to the Washington Blade because the group is upset over an article the Blade published about whether shirts could be worn last year's Cherry main event.

Guidestar spokesperson Suzann Kaufman said the IRS had not transmitted to Guidestar the Cherry Fund's 2004 report as of earlier this week. She said the IRS sends Guidestar 990 reports from thousands of nonprofit charitable groups shortly after the IRS receives them. Kaufman said Guidestar's database records obtained from the IRS show that the Cherry Fund had not filed its 2004 report.

She said the IRS occasionally omits sending Guidestar a 990 from a group that has filed it with the IRS, but such glitches are rare.

Martin Yeung, the Cherry Fund's former chair, said he learned that Cherry Fund officials were running late in filing the group's 2004 990 form, but he said he could not be sure if the group filed the form.

Yeung said most of the "old guard" that had organized the Cherry parties in past years left the organization shortly after he left following the 2003 Cherry events.

"They are trying to do the best they can," he said of the new group of organizers.

Scott Wells, a tax attorney and editor of tax-related reports for the Bureau of National Affairs, a publishing firm, said he prepared the Cherry Fund's 990 forms through 2003. He said the group's new leadership chose not to retain him after that year, and he does not know who is advising the group on the 990 forms.

IRS rules require charitable tax-exempt groups to file 990 forms and release them to the public as a way for the public to evaluate charities and decide whether to contribute money to them. One key factor for the public to consider, Kaufman said, is the cost in overhead expenses a charity incurs and the percentage of money it raises from donors that goes to the charitable work it promotes itself as providing.

IRS spokesperson Michelle Lamishaw said the penalty for failing to file a 990 form is the lesser amount of $20 a day for each day an organization is overdue in its filing or 5 percent of its gross revenue for the year. She said the maximum fine is $10,000.

Lamishaw said a similar fine of $20 a day is imposed if a tax-exempt group refuses to release its filed 990 report to a member of the public upon request. The Washington Blade has informed Richard, the Cherry Fund's attorney, of the paper's request for the 2004 form as soon as it is filed with the IRS.

The Cherry Fund's 2003 990 report is the latest report available for the group through Guidestar, which publishes the 990 forms on its website.

The report shows that the 2003 Cherry events pulled in $296,552 in revenue and generated $54,500, or 17 percent of the money it raised, for the gay and AIDS groups it designated as beneficiaries.

The 2003 report shows that the Cherry Fund incurred $314,118 in expenses, creating a $17,566 deficit for the events that year.

Among the overhead expenses listed in the report is $60,925 for "other salaries and wages."

Only $20K donated from Cherry 10

Yeung, who served as Cherry Fund chair for the 2003 events, said the salary figure covered the contractual fees the group paid to performers, such as DJs and singers, and any transportation costs for flying in out-of-town performers and paying for their lodging. He said the figure also covered costs for paying stage and lighting technicians and others retained to operate entertainment venues.

Other expenses listed on the 2003 report include $54,400 for "supplies," $49,688 for "equipment rental and maintenance," $55,159 for "rent," $28,266 for "marketing," and $6,175 for "printing and publications."

Yeung said the rental cost was for the D.C. Convention Center, which he said was higher than the other locations the Cherry Fund has used for its main, Saturday night dance party. The group has rented gay or gay-friendly nightclubs for the main dance party in recent years.

The Cherry Fund's 2005 IRS 990 report is due May 15. Although the group has not disclosed information about its income and expenses for the 2005 Cherry party, five groups named as beneficiaries in 2005 have said they each received $4,000 from the Cherry Fund. The groups that received the funds were the Whitman-Walker Clinic, the Mautner Project, Northern Virginia AIDS Ministry, the D.C. Center and the Sexual Minority Youth Assistance League.

Those donations would bring the Cherry Fund's total contribution to beneficiaries that year to $20,000, an improvement over the group's inability to make any contributions to beneficiaries the previous year.

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