Scientific & Cultural Facilities District
2014 Reauthorization Eligibility Workgroup
What is SCFD?
The Scientific and Cultural Facilities District (SCFD) is a votercreated special tax district that distributes revenue generated by
a 1¢ on $10 retail sales and use tax to over 300 scientific and
cultural organizations in the seven-county metro Denver area.
The primary purpose of the SCFD is “to provide for the
enlightenment and entertainment of the public through the
production, presentation, exhibition, advancement or
preservation of art, music, theatre, dance, zoology, botany,
natural history, or cultural history.”
How the Tiers are Funded
The SCFD statute contains three separate tax levies that,
when combined, equal a 1¢ on $10 sales tax. The taxes
are levied for the purpose of making scientific & cultural
activities accessible to the public.
Tax Levy of .065 = Tier I
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Consists of 5 institutions: Denver Museum of Nature and
Science, Denver Zoo, Denver Art Museum, The Denver
Center for the Performing Arts, and Denver Botanic
Gardens.
Receive 65.5% of the annual distribution up to and including
$38 million, and 64% exceeding $38 million
Tier I organizations submit a detailed report including
audited financials annually and must make presentations to
the SCFD Board of Directors
Tax Levy of .021 = Tier II
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Organizations qualify based on an annual operating income
threshold, which is adjusted annually based on the Consumer
Price Index. (2014 threshold approx. $1.5 million)
In 2013 there were 26 Tier II organizations. Tier II’s share of
the SCFD distribution is 21% up to and including $38 million,
and 22% exceeding $38 million.
Funding at Tier II is determined based on an equal weighting
of qualifying operating income and paid attendance.
Organizations must annually submit qualification
applications, audited financials, detailed final reports and
make presentations to the SCFD Board of Directors
Tax Levy of .0135 = Tier III
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Tier III receives 13.5% of the SCFD distribution up to and including $38 million, and
14% exceeding $38 million
County cultural councils allocate funding annually through an open grant process.
The funds available for distribution in each county is determined by the percentage
of total tax collected in that specific county
Approximately 260 organizations are funded annually
Each county appoints volunteer members to their Cultural Councils
Councils are responsible for creating county guidelines, reading all grant
applications for their county, and determining grant awards for organizations.
Reauthorization
After 25 years of success, what does a 21st
century SCFD need to look like?
Reauthorization Process
•Process Started in 2011 (Stakeholder Engagement
Sessions in Dec 2011 & Jan 2012)
• From Feedback, some changes were able to be
implemented (ex. Reduction in grant application questions,
multi-county grant system, elimination of some Letters of
Intent…)
• Reauthorization process, workgroup concept,
and discussion issues were created based on
stakeholder feedback (including funded orgs, councils
SCFD Board & Staff)
March-April 2015
Board determines
statutory changes &
tax levies
January-March 2015
Staff & Task Force present
final report on outcomes
to SCFD Board
November-December 2014
Task Force & Staff review work group
outcomes & identify options
October-November 2014
Staff collects work group reports & drafts summary
of outcomes. Board & Staff appoint Task Force
Members
January-September 2014
Staff prepares & vets draft policies, collects/summarizes data &
meets with work groups
Reauthorization Schedule
Reauthorization Guiding Principles
Incremental Change
Clarify
Simplify
Strengthen Transparency
Strengthen Accountability
Nonprofit Best Practices
2014 SCFD Work Groups
Local Government Agencies
Tier II
County Cultural Councils
Tier III
Eligibility
Possible Fourth Tier
Tier I
Board charge: Define current disciplines with a view to
21st century changes; clarify exemptions using same
perspective; consider any eligibility criteria options
identified in the Tier II and Tier III work groups.
• Nonprofit sector standards have increased significantly over
past 20 years.
• Should eligibility standards change to reflect public
expectations re how tax $$ are spent?
• Potential eligibility factors identified in 2013 board/staff
interviews : size of budget, % of budget from SCFD, paid staff,
years of existence, financial performance, 990s, annual audits.
Reviewing Life Cycle of Nonprofit Organizations
Current Eligibility Requirements
All SCFD eligible organizations must meet the following five
statutory requirements:
1. Primary Purpose
2. 501(c)(3) exemption status for at least 3 years Tier III (5
years Tier II)
3. Organizational and financial capacity
4. Public benefit
5. Geographic requirement
25%
Tier I
growth
since
1990
400%
211%
Is the historic growth in the number of SCFD
Eligible Organizations Sustainable?
Cultural
Scientific
Current disciplines
Facilities
Facilities
Cultural
Facilities
Art
Music
Theatre
Scientific
Facilities
Dance
Zoology
Botany
Natural
History
The primary purpose of the SCFD is "to provide for the enlightenment
and entertainment of the public through the production, presentation,
exhibition, advancement or preservation of art, music, theatre, dance,
zoology, botany, natural history, or cultural history.”
Cultural
History
Re-organizing Cultural Disciplines
Cultural
Organizations
Cultural History as defined in Statute: the history
that concentrates upon the social, intellectual, and
artistic aspects or forces in the life of a people,
region, state, or nation, for which an understanding
and appreciation may be gained through buildings,
structures, sites, architecture, objects, and
activities significant in said history.
Visual Arts
Performing Arts
Cultural History
Re-organizing Scientific Disciplines
Scientific
Organizations
Earth Science (the earth, atmosphere, universe)
is the presentation, exhibition, or advancement of
astronomy, atmospheric science, chemistry, geology,
ecology, and physics to the public.
Earth
Sciences
Life Sciences
Life Science (humans, plants, and animals) is the presentation
exhibition, or advancement of botany, biology, paleontology, and
zoology to the public.
Clarifying Exemptions
Current Exemptions
Additional Exemptions
The statute does not allow funding of:
•Any agency of the state (by implication
excludes libraries)
•Any educational institution, school or
educational foundation
•Any radio or television broadcasting network
or station
•Any cable communications system
•Any newspaper or magazine
•Any organization that is engaged solely in
the acquisition or physical restoration of
historic buildings, structures or sites
Possible exemptions to be added for clarification:
•Entities that already have a dedicated State or
Federal public funding stream, e.g.: Libraries
•Agricultural Organizations and agribusiness
•Social clubs/Community service
•Solely Virtual Programming
•Literacy
•Literary Arts?
Strengthening Financial and
Organizational Capacity
Requirements
Potential statutory changes:
1. All organizations must have a IRS Letter of Determination
stating that the organization is a 501(c)(3) nonprofit and has
been operating and serving the public for at least 5 years for
Tier IIIs and 7 years for Tier II at time the eligibility application
is submitted.
•Tier III would increase from 3 to 5 years
•Tier II would increase from 5 to 7 years
2. Institute a minimum income threshold for Tier III
e.g.: $25,000
Potential policy changes:
•All organizations required to file a 990 or 990EZ
•All organizations, with an annual operating income over
$500,000 required to submit an independent audit of
financials
•SCFD has been operating for quarter of a century. Some
organizations have had eligibility since 1989. Should all
organizations have to periodically reapply for eligibility?
Next Meeting
Wednesday July 16, 2014
1:30-3:30pm
Denver Botanic Gardens (Waring House)
Other possible discussion areas?