Allen Foundation in Danger of Losing Tax-Exempt Status

Football coach George Allen’s nonprofit National Fitness Foundation faces losing its tax-exempt status because it is long overdue in filing required state financial reports, documents show.

A “final-warning” letter dated Dec. 14 from the office of State Atty. Gen. John K. Van de Kamp to Allen’s organization said: “Unless we receive the delinquent report promptly, a copy of this letter will be sent to the Franchise Tax Board,” advising the state agency “to disallow your organization’s tax exemption and to assess a minimum tax of $300 for each year of noncompliance.”

Allen, the 71-year-old former coach of the Rams and the Washington Redskins, who on Tuesday was hired as coach at Cal State Long Beach, said Wednesday night that he did not know about the letter.

“That’s news to me,” Allen said. “That’s not my area, all those different filings. I don’t see those things. They don’t come in to me.”

He said foundation treasurer Bill Harris takes care of the financial dealings. Harris, who resigned from the position in October, but has returned, according to Allen, could not be reached for comment.

“To have some little negative thing about filing a statement . . . that doesn’t put down all the great things we’ve done for kids the last five years,” Allen said.

Allen’s El Segundo-based foundation already had been granted an extension to file its report. One of the reasons for such reports is to provide the public with information on what tax-exempt organizations do with money they raise.

“Delinquent filing is a very serious matter,” said the letter signed by Julia S. Takeuchi of the attorney general’s Registry of Charitable Trusts. “Those persons whose negligence causes disallowance of tax exemption are personally liable to the organization for taxes and interest.”

Despite the warning, foundation accountant Philip Marshall said Wednesday that the organization is up to date on all required government reports.

However, late filing of legally required reports and tax forms has been a recurring problem for Allen’s foundation, which he established in 1982 to raise $30 million for construction of a U.S. Fitness Academy. After years of operation, the foundation had failed to file required financial reports as late as 1988 in Illinois, California and Orange County.

Moreover, in October 1988, Allen’s ambitious plan for an academy to train the nation’s coaches was dealt a severe blow when the Orange County Board of Supervisors let expire a lease-option on 175 acres in Laguna Niguel. Supervisors, who already had granted Allen an eight-month extension on the option, had been offering to lease the undeveloped site to the foundation for $1 a year.

Allen had not raised enough money to develop the property, supervisors said.

Allen’s foundation raised $2.7 million through 1987 but spent nearly all of it, according to state and federal tax records. Much of the money was spent trying to raise money, typically by holding high-profile fund-raising banquets.

“A thorough review of the history of the project raised many questions as to the foundation’s ability to comply with the requirements of the option agreement,” Orange County Supervisor Thomas F. Riley wrote to Allen, advising him of the board’s decision.

Such revelations did not seem to alter the decision to hire Allen at Cal State Long Beach, where he will earn an annual base salary of $66,000, as well as an estimated $35,000 in income generated by outside contributions.

Provost Karl Anatol of Cal State Long Beach said officials were aware of the National Fitness Foundation’s problems before offering Allen the position.

“The only concern I had had to do with George Allen’s reputation as a coach and his ability as a coach,” said Anatol, speaking on behalf of the university in the absence of President Curtis L. McCray.

Anatol, however, said the delinquent filings could become a problem.

“We’re concerned about image--and we’re concerned about the coach’s image,” he said.

“We’re reasonably sure that he will take care of the situation. Right now, we know we’ve gotten a good coach, an excellent coach.”

Allen said the fate of the group will not change drastically now that he has pressing duties as Long Beach’s coach.

“It’ll still go,” Allen said of the foundation. “We might do as many projects. I had two summer camps last year for kids and it has done an awful lot of good. Most of it was volunteers.”

Allen said the National Fitness Foundation will host a World Congress in Chicago, May 13-18, and has raised about $300,000 for the event.

The National Fitness Foundation was established in 1982 as an Illinois corporation but was dissolved by the Illinois Secretary of State in 1987 for failure to file a required annual report.

California officials have been uncertain as to how the dissolution affects the organization’s authority to do business here.

“We don’t have the authority to make an interpretation,” said Jane Bacon, chief of the corporate division for the California Secretary of State. “That would have to be decided in the courts. It’s a difficult question. They (the National Fitness Foundation) have done everything they are supposed to do with regards to filing papers to us.”

Although the foundation has operated in California since 1985, it had not filed required financial reports with the Registry of Charitable Trusts until mid-1988--after inquiries by The Times.

The foundation also did not file the required documents with the California Secretary of State’s office that were due in December 1987 until May of this year.

And the foundation, which used to operate an office in El Toro and held a large fund-raising banquet in 1986 in Irvine, did not obtain the necessary permit from Orange County authorities to solicit charitable donations in the county until September 1988--also after The Times’ inquiries. That permit expired three months later and has not been renewed, a county spokeswoman said Wednesday.

Allen has maintained he did not gain personal income from the National Fitness Foundation, which he founded and serves as chief executive officer.

“I’m giving my time and many times giving my own money,” Allen said Wednesday.

Tax forms for 1987 show Allen was budgeted to receive an annual salary of $125,000 but was actually paid only $10,417 that year. More than $161,000 in salary owed to Allen was “forgiven” by him, according to the forms.