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IRS revokes Nighthawks’ nonprofit status

  • Upper Valley Nighthawks owner Noah Crane talks to the new team at the start of their first practice of the season at the Maxfield Sports Complex in White River Junction, Vt., on Monday, June 3, 2019. (Valley News - Joseph Ressler) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com. Valley News file photograph

  • At Maxfield Sports Complex in Hartford, Vt., Noah Crane watches the Hartford baseball team practice. Crane was at the field to check the progress of the lights being installed. (Valley News - Jennifer Hauck) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com. Jennifer Hauck

  • Noah Crane owner of the Upper Valley Nighthawks looks over the work being done at Maxfield Sports Complex in Hartford, Vt., on May 25, 2016. (Valley News - Jennifer Hauck) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com. Jennifer Hauck

Valley News Staff Writer
Published: 11/2/2019 10:23:39 PM
Modified: 11/3/2019 10:17:42 PM

In 2015, Noah Crane announced he was bringing summer baseball in the Upper Valley to a new level. Crane recruited college players and coaches from across the country to play for his fledgling Upper Valley Nighthawks, who threw their first pitch in June of the following year.

Playing in the 13-team New England Collegiate Baseball League — NECBL, for short — the Nighthawks made Maxfield Sports Complex on Route 5 in White River Junction their home. The team’s startup costs were in the $300,000-$400,000 range, which included the league’s $75,000 expansion fee.

To help cover the expenses, Crane went about setting up a nonprofit foundation — just as the league and its other dozen teams have done over the years.

Getting the Internal Revenue Service’s stamp of approval to operate as a nonprofit was key to the Nighthawks’ survival. Through its Nighthawks Baseball Foundation, the team could solicit charitable contributions — large and small — from businesses, philanthropic organizations and individuals.

In a Valley News interview shortly before the start of the Nighthawks’ inaugural season, Crane, the team’s general manager, said he had secured sizable donations early on from the Hanover-based Jack and Dorothy Byrne Foundation and Mascoma Bank.

As part of his sales pitch, Crane, a 1997 Woodstock Union High School graduate, stressed to potential donors that the Nighthawks were a community asset that provided more than just inexpensive family entertainment in summer months. The Nighthawks’ foundation could also raise money to support youth baseball and other nonprofit ventures in the Upper Valley.

But convincing people that a summer baseball team was a worthy cause could be challenging, Crane said at the outset.

“We aren’t a food bank. We don’t solve homelessness. We play baseball,” he told the Valley News in June 2016. “That’s the trickiest part. As a general manager, that’s so hard. We don’t look like a nonprofit.”

Four years after the Nighthawks took flight, however, it’s about more than just looks.

The IRS revoked the Nighthawks’ nonprofit status on May 15 for failing to file federal tax returns for three consecutive years, according to the federal agency’s data base for tax-exempt organizations.

Under federal law, 501(c)(3) nonprofit organizations must annually file what is known as a Form 990. The document is a public record that provides a window into a nonprofit’s finances.

But the IRS has no records of the Nighthawks ever filing a Form 990 since the team began soliciting charitable donations sometime after the team was formed.

As a result, the public has no way of verifying how much money the team’s foundation has raised or how it was spent since its inception. The absence of 990 filings also makes it difficult for the public to get a handle on whether the team has lived up to its early promise to pour foundation dollars back into Upper Valley athletic programs.

When the Valley News contacted Crane initially in late September about his team’s loss of tax-exempt status, he downplayed the Nighthawks’ failure to follow IRS rules. The team operated “under the umbrella of the (NECBL)” which is also a nonprofit, and “we don’t need to have our (own) 501(c)(3),” he said.

Three months after having their nonprofit status revoked by the IRS, the Nighthawks were still promoting themselves as a nonprofit in search of charity dollars.

“It’s National Nonprofit Day and Mascoma Bank is donating ($500) to the nonprofit that gets the most comments on their Facebook page,” stated an Aug. 17 post on the Nighthawks’ Facebook page. “All you Nighthawk fans please consider sharing and commenting.”

The Nighthawks didn’t win the bank’s contest. Nevertheless, “you can’t solicit funds and you can’t put yourself out there as 501(c)(3) when you’re not,” said Elizabeth Schmidt, a professor at the University of Massachusetts-Amherst’s School of Public Policy, who specializes in nonprofits.

Until she was contacted by the Valley News, Schmidt, an attorney, was not familiar with the Nighthawks’ case, but she talked about nonprofits in general.

Last week, Crane told the Valley News that it wasn’t until sometime in August that he found out the IRS had revoked his team’s nonprofit status. The team has since hired a certified public accountant to “fix our issues,” he said.

The foundation’s 990s are now being “redone” and should be completed within days, he added.

In an earlier interview on Sept. 25, Crane said he had sent his foundation’s 990 paperwork to the league office, which is located in North Adams, Mass. Last month, however, NECBL Commissioner Sean McGrath told the Valley News that he hasn’t seen any of the paperwork that Crane mentioned.

IRS records indicate that every other NECBL team has regularly filed its 990s in recent years.

“At the end of the day, all the other teams in the league are legally their own nonprofit,” Schmidt said.

Each team included its general manager’s salary in the annual tax returns. Their pay ranged from $10,000 to $40,000 a year, depending on the number of hours worked each week. For instance, the general manager of the Vermont Mountaineers, who are based in Montpelier, earned $17,000 in 2017 for working 20 hours a week.

Since the Nighthawks’ outset, Crane has said that he hasn’t received a salary, which he reaffirmed in an email last week.

“The Nighthawks have never turned a profit and have been supported by my family because of our love of this community and baseball,” he said.

Crane, who wouldn’t disclose his age, was born in Hanover, but his family moved six times while he was growing up to accommodate his father’s successful career. Jonathan Crane, a 1971 Dartmouth graduate, is a longtime technology industry executive. The family spent summers in Woodstock, where it eventually settled in the mid-1990s.

After graduating from high school, Crane played baseball at UMass-Amherst, which led to a couple of assistant coaching jobs at the college level. Married with young children, Crane returned to the Upper Valley, where he became the baseball coach at Mascoma Valley Regional High School in 2006.

Three years later, Crane and his father got involved with the NECBL. They paid $85,000 for the rights to relocate a team from Manchester, Conn., to Laconia, N.H. Crane became Laconia’s first general manager when the inaugural season began in 2010.

In 2015, the Cranes parted ways with Laconia and established the Nighthawks Baseball Foundation in the Upper Valley. The younger Crane was put in charge of the team’s daily operations, working out of an office in his Lebanon home.

Unlike other summer leagues that operate as for-profit entities, like minor league baseball, the NECBL is a group of 13 nonprofits.

From the start, Crane knew that community support was critical to his vision, as did league commissioner McGrath.

“We’re not a minor league operation with multimillion-dollar budgets,” McGrath said in a 2016 interview ahead of the Nighthawks’ inaugural season. “We look for a community that is tied into a baseball person that, we believe, can provide enough support.”

Crane said at the time that the team didn’t raise enough capital in donations at the beginning, and they were hit with unanticipated expenses such as legal fees, further increasing their need for community support.

That’s where the Byrne Foundation and Mascoma Bank came in.

When asked if Mascoma Bank was aware the Nighthawks had lost their federal nonprofit status in May, a spokeswoman declined to comment. Samantha Pause, the bank’s chief marketing officer, also wouldn’t say how much the bank had contributed.

Calls to the Byrne Foundation’s office in downtown Hanover were not returned. A review of the Byrne Foundation’s most recent Form 990 showed the organization, itself a nonprofit, had given $15,000 to the Nighthawks Baseball Foundation in 2018.

On Jan. 31, 2017, Crane launched a public campaign to raise money to build a press box and concession stand at Maxfield Sports Complex. The Nighthawks took in $37,000 from outside sources to help pay for the project, which cost roughly $90,000, he said.

The remainder of project costs — more than $50,000 — was covered by family contributions and a portion of the team’s operating revenue, Crane said.

While in the Upper Valley, players and coaches live with local families, who open their homes to the team, in part, to help the Nighthawks make a go of it.

Former New Hampshire Agriculture Commissioner Steve Taylor, of Meriden, has hosted coaches every summer since the Nighthawks arrived in the Upper Valley. He said he was disappointed to learn the team had lost its nonprofit status, but, more importantly, that it had failed to let the public know what had happened.

“I’ve served on a lot of nonprofit boards. I’m a hard-ass about governance and practices,” Taylor said. “You’re basically running a public charity, if you’re soliciting support from the public.”

In the case of the Nighthawks, the “support was broadly solicited. You can’t just say it was the Byrne Foundation and Mascoma Bank. For people like me, who thought this was very good for our area, it was community-building.”

The Nighthawks’ organizational problems don’t end with the IRS. The team’s foundation failed to register with the charitable trust unit of the New Hampshire Attorney General’s Office. (Although the Nighthawks play their home games in Vermont, they’re considered a New Hampshire entity because Crane runs the team out of his residence in Lebanon.)

Because the team didn’t register with the state’s charitable trust unit, New Hampshire has never recognized the Nighthawks as a charity.

On Sept. 6, 2017, the charitable trust unit sent a letter to the team asking the Nighthawks to register. Twelve days later, the team submitted a registration application, which included a document signed by Jonathan Crane and Natasha Payton, who was listed as the treasurer on the Nighthawks Foundation’s board of directors.

On Sept. 26, 2017, the charitable trust unit sent a letter to the Nighthawks indicating that it needed a copy of the foundation’s bylaws before it could approve the application for nonprofit status in New Hampshire.

The state didn’t receive a response.

A day after his initial interview in September with the Valley News about the issues with the IRS and the state’s charitable trust unit, Crane sent an email to the paper.

“We clearly have paperwork issues and the filings were not done properly,” he wrote. “I have turned over all documents to a new accounting firm and they are in the process of correcting all of our outstanding issues. They expect to have everything cleared up by the end of October.”

Two days after the interview, the team registered with the state.

Its IRS problems can’t be fixed as easily. It could take as long as 15 months for the foundation to be reinstated.

The Nighthawks can still “raise funds, but until they become a 501(c)(3) again, they can’t say their funds are tax-deductible,” said Schmidt, the UMass professor.

The team’s website mentions that the Nighthawks Baseball Foundation has a 13-member governing board. A half-dozen current and former board members either declined to comment or didn’t respond to phone messages.

Payton, who works in the marketing department at King Arthur Flour in Norwich, said she stepped down from the board last December. She declined to talk about the Nighthawks, except to say that she never served as the board’s treasurer, which is how she’s listed under the 2017 charitable trust application.

On Oct. 24, Crane updated the Valley News on where the foundation stands with the IRS and the state of New Hampshire. The foundation is now on solid ground with the state, he said.

In a recent email exchange with the Valley News, Crane didn’t seem worried about the team’s future.

“As I said before,” he wrote, “this error will be resolved shortly and this story is completely unnecessary.”

Although in the eyes of the IRS, the Nighthawks currently aren’t a nonprofit, the team can continue to accept donations through the NECBL, Crane said.

Pete Nakos can be reached at pnakos@vnews.com or 603-727-3306.




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