Issue with tourism agency’s fundraising arm prompts corrective legislation

For more than three years, the not-for-profit foundation created to collect private donations for Indiana’s tourism agency has operated without being subject to routine state audits due to a legislative oversight.

Lawmakers are working to correct the situation this year after the Indiana Inspector General’s Office discovered the issue with the foundation that supports the Indiana Destination Development Corp. The foundation has raised more than $1 million since its inception.

The issue was found after the tourism agency requested a routine advisory opinion from the Inspector General’s office as to whether it could use its own employees to raise money on behalf of the Indiana Destination Development Foundation, according to Sean Gorman, Indiana State Ethics Director at the Office of Inspector General.

While the commission found that IDDC employees can work on behalf of the foundation without violating the state’s code of ethics, it also learned that the not-for-profit was not codified in state law.

“Structurally, it wasn’t created in the same manner as some other state agencies that also have separate foundations,” Gorman said.

Gorman said the IDDC didn’t do anything wrong. “We’re watching the legislation to see how everything plays out,” he added, “but I don’t think there are any concerns from the State Ethics Commission.”

After the oversight was discovered, two lawmakers who sponsored the original legislation creating the IDDC wrote to the State Ethics Commission promising to correct the issue through legislation.

“It has come to our attention that the State Ethics Commission has concerns related to the IDDC’s use of a foundation,” Rep. Mike Karickhoff, R-Kokomo, and Sen. Chip Perfect, R-Lawrenceburg, wrote in a June 23 letter to the commission. “We plan to provide clarity on this issue with legislation during the upcoming 2023 legislative session.”

That legislation, House Bill 1209, codifies the foundation into state law and requires the not-for-profit to be subject to compliance audits by the State Board of Accounts.

On Tuesday, the House voted 95-1 to advance the clarifying legislation. The bill is now awaiting a committee assignment in the Senate.

The Indiana Destination Development Corporation is a quasi-government entity—similar to the Indiana Economic Development Corp.—that was formed through legislation in 2019. The law dissolved the Indiana Office of Tourism Development and created the IDDC in its place while expanding the agency’s mission to help businesses attract workers and colleges and universities retain graduates.

Karickhoff said the 2019 bill was intended to allow the IDDC to create a foundation to raise private sector dollars similar to the Indiana Economic Development Corporation or the Indiana Department of Natural Resources, which have their own not-for-profit fundraising arms.

With its widening mission, the IDDC is asking the Indiana General Assembly to more than double its state-funded budget over the next two years, requesting a baseline annual budget of $14.8 million in 2024 and 2025 and more than $8 million in additional pass-through funding for entertainment venues, museums and a new tourism bid fun meant to attract more events to the state. Its baseline budget for the current fiscal year is $5.8 million.

Part of that additional funding would also go toward a targeted national media campaign to promote Indiana to non-Hoosiers.

“We would target those states that are losing population now. I’m sure you’ve all heard about California and people leaving in droves,” CEO Elaine Bedel said during a budget hearing before the House Ways and Means Committee. “We want to tell them that Indiana might be a great place for them to come.”

The public-private corporation is behind the $5.6 million “IN Indiana” ad campaign launched in June that was seen as a response to other successful tourism marketing efforts in neighboring Midwestern states, including “Pure Michigan” and Ohio’s “Find It Here.”