Tax records: Pageant paid out less than half of its scholarships

Tax records indicate the Miss South Carolina Organization paid out less than half of its scholarships awarded between 1996 through 2004 while promoting itself as a leading scholarship source for young women in the Palmetto State.

The nonprofit organization, currently being examined by the S.C. Secretary of State over allegations of scholarship misrepresentation and financial irregularities, offered $731,900 in scholarships over those nine years but disbursed only $309,700, tax filings show. And the disparity in scholarships offered and money disbursed has widened dramatically.

In 1996, the organization offered $60,200 in scholarships and paid out $52,666, according to financial statements. In 2004, $109,200 was offered, but only $32,620 was claimed and disbursed.

In contrast, the organization paid out $35,960 that year to its only compensated board member, pageant director Joey Sanders.

According to tax filings, the organization's scholarship monies do not appear to be maintained in a separate account, but rather in a general fund

that also finances pageant production, trips, meals, housing, operating expenses and related costs. In 2004, the pageant expenses totaled more than $670,000.

Pageant President Joe Sanders, who runs the organization with his wife, comptroller Gail Sanders, and their son, Joey Sanders, declined to comment on the organization's finances.

"The review is still going on, and it would be improper for me to say anything," he said.

Dale Keown, a member of organization's board of directors and accountant, also declined to comment on the organization's finances, on advice of the board's attorney, until the state review is complete.

Gail Sanders said in an earlier interview that scholarship winners who properly apply for their money receive every penny. She added she had no idea why so many women don't collect the money they're awarded.

"It is amazing to me how many of them fail to do that," she said.

Some contestants have already completed their education. Many scholarships are disbursed in later years -- a $20,000 award might be paid out over four years of a woman's college education. And the funds paid by the Miss South Carolina Organization do not include in-kind scholarships from local colleges and universities or awards from the local or national pageant levels.

Some scholarship recipients have said they face difficulties in filling out large amounts of paperwork, keeping track of receipts, waiting on local scholarship monies to be paid first, requesting extensions and attempting to claim the money before college registration deadlines.

Pageant contestants who have experienced difficulty in claiming scholarship money include Carrie Davis Cousar, Miss South Carolina 1992, and Ashley Wood, who won the crown in 2004.

Gail Sanders, however, said the rules governing scholarship disbursements are simple and easy to follow.

The rules have changed over the years, said Mary Gainey Pitts, Miss South Carolina 1990. Pitts had already received her bachelor's degree when she won the crown and hadn't decided whether to attend graduate school. Pageant organizers held the cash for her.

"I just called and said, 'I'm not ready yet – do you mind if I wait?'" Pitts said. Several years later, she decided not to return to school and received half of her scholarship funds in cash, which was provided for in the contract at the time.

Today, scholarships go only toward current educational expenses, and cash settlements are not allowed.

Foundation oversees funds

In 2004, the Miss South Carolina Organization turned to the Spartanburg County Foundation to oversee a newly created scholarship fund. Donations to the foundation are tax deductible; contributions to the pageant are not.

A $150,000 donation from a long-time pageant volunteer gave birth to the fund, and the Spartanburg County Foundation's year-end report for 2004 lists the Miss South Carolina fund balance as $171,781. The foundation makes all checks payable to the college or university of the contestant's choice, said President John Dargan, and not to the scholarship recipients or the Miss South Carolina Organization.

The Miss South Carolina Organization still determines who qualifies for the funds. That's where red tape in scholarship disbursement guidelines enter the picture, said some former contestants and parents of former contestants.

Rachel E. Leonard can be reached at 562-7230 or

rachel.leonard@shj.com.