PUEBLO — The city of Pueblo cut its funding to non-profits for the 2025 budget, but one organization still getting funding had its tax-exempt status revoked from the Internal Revenue Service (IRS) in 2020.
La Gente Youth Sports is an organization with a decades long history in the city of Pueblo. It touts itself as an organization providing sport opportunities to low and moderate income families.
The organization dates back to 1976, in 2020 the IRS revoked its status after not filing form 990s for three consecutive years. Records show that the city has consistently provided the organization with funding since 2018.
La Gente Youth Sports has received more than $130,000 from the city since 2018, with $18,000 budgeted for 2025.
A New Position
Earlier in 2024, Pueblo Mayor Heather Graham created a position for the city, the “Non-Profit Compliance Coordinator”.
In August, Melissa Cook began the new position with the city of Pueblo. In September, she presented to city council a new process for non-profits to apply for funding from the city. Cook also looked at other “non-departmental” requests which she called quasi-governmental organizations.
Cook said previously the process for non-profits to apply for funding was a simple and non-transparent process.
“Any nonprofit that wanted to essentially become a line item in the city's budget, would send a letter to the mayor requesting these funds,” Cook said.
The new process for the 2025 budget included an application where non-profits submitted documentation including financial documents, budgets, and a recent audit.
Cook said in a City Council work session in September that the review process included seeing if non-profits filed Form 990s, the form submitted to the IRS for tax-exempt organizations.
In an interview with News5Investigates Cook said not every organization submitted 990s.
When News5Investigates asked if Cook was aware that La Gente Youth Sports had its tax-exempt status revoked in 2020, she said she was not. It raised more questions about the city’s process for vetting and determining which non-profits would not receive funding.
“We went and made sure that they were all in good standing with the Secretary of State,” Cook said, “and so if that happened, then that documentation had not been filed by the point that we had had reviewed this.”
According to the IRS website, La Gente Youth Sports had the tax-exempt status automatically revoked in May of 2020. The status was publicly posted in August 2020.
Cook said not every organization on the list that received funding is a non-profit, when News5Investigates asked about La Gente Youth Sports being considered a non-profit she said “I can’t answer that question at this exact time.”
What’s considered “Good Standing”
Of the 22 organizations listed in the city’s budget under “non-departmental contributions and donations” all but two have registered with the IRS as a tax-exempt organization.
The two organizations that have not are government entities. “Abatement Assistance” which Pueblo’s Mayor Heather Graham said is under code enforcement and “Non-profit payments to the county”.
Cook mentioned all organizations had to be in “good standing” with the Secretary of State’s Office.
The Colorado Secretary of State requires businesses to register every year to be considered “in good standing”.
“So when you're looking at the Colorado Secretary of State filing and it says that they're in good standing, it's because they filed their annual registrations with the Secretary of State and are in good standing with the state, just in terms of like the business status, with the state completely separate than the federal,” Doreen Merz, a tax partner with Stockman Kast Ryan and Company in Colorado Springs who specializes in non-profits.
According to the Secretary of State’s website ““Good Standing” status means that statutory filing requirements have been met with our office. However, this office does not review or verify information submitted in those filings. This office also does not regulate or investigate business practices or operations.
Non-profit organizations register as businesses labeled “non-profit corporations” with the Secretary of State’s office. However, in order to be able to solicit money for donations, an organization also has to register as a “charitable organization” with the Secretary of State. It’s a separate kind of registration.
In order to complete the charitable organization registration, Merz said an organization must have its Form 990s. The Secretary of State lists “La Gente Youth Sports” status as a charity as “Expired” as of August 2020.
As a business, La Gente Youth Sports is in good standing, but as a charity in Colorado it is not.
Merz said without a charitable organization registration, a group cannot be soliciting for donations.
“[If] I'm going to do a fundraising dinner and I'm going to go out and I'm going to say we are this awesome, not for profit, please, you know, provide charitable donations to us that's not allowed,” Merz said.
La Gente Youth Sports
News5Investigates reached out La Gente Youth Sports’ Executive Director, Zachary Valdez by phone and email.
The following day after an initial interview request, Valdez said he had been on the phone with the IRS and learned its tax-exempt status had been revoked for filing “late 990s”.
Speaking over the phone with News5Investigates, Valdez said he had the 990s and would send them to News5 asked for Valdez to send them by Friday at noon, prior to this story airing on Sunday. The forms were never sent.
Valdez also said he was unaware his organization’s charitable organization status was expired.
When News5Investigates asked for an on-camera interview, Valdez said he would have to check with his board.
The Mayor’s Response
During an interview with Cook, the city’s Director of Public Affairs Haley Sue Robinson said the recommendations made to City Council on which organizations to cut funding to were made by the Mayor.
News5Investigates then sat down with Mayor Graham.
Graham said she was unaware of La Gente Youth Sports tax-exempt status being revoked and said the city “didn’t specifically ask for form 990s”.
News5Investigates showed Graham a printed off paper from the IRS website showing the status had been revoked.
When asked about it, Graham said without an address for La Gente Youth Sports on the physical document given to her she would need to look into it.
“This might be something that you looked into, but that's not specifically something that we required from the city,” Graham said.
Graham did gather a binder of the 29 applications submitted to the city, some non-profit organizations did submit Form 990s, La Gente Youth Sports did not.
News5Investigates asked for a copy of the applications. The City of Pueblo said it would take 67 hours to go through the 4,000 pages of documents for redaction and cost more than $2,000. When News5Investigates requested just the Form 990s submitted, only ten organizations were included.
News5 did get ahold of an example of an application an organization had to submit, it included a question asking if the organization was tax-exempt. News5Investigates is working to learn if La Gente Youth Sports said it was a tax-exempt organization in its application.
Graham said she needed a day or two to look into La Gente Youth Sports tax-exempt status.
When News5Investigates interviewed her days later she said what we found was correct but reiterated that “it was not required” for organizations to submit this form.
“We’re not the FBI, you know essentially we fund non-profits and non-departmentals who provide services to the city. You are correct in what you’re saying that they are not complaint with the IRS but then the IRS gives a disclaimer about why somebody is not compliant,” Graham said.
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