Greensboro, NC — Downtown Greensboro Inc. (DGI), a nonprofit organization that receives significant taxpayer funding from both City and Guilford County tax revenues, is facing intensifying scrutiny over potential violations of federal tax-exempt rules, misuse of public funds, and systemic conflicts of interest among its board members, City Council and Greensboro employees, all from one expense report provided to the City covering FY 23-24 DGI spending.
Watchdog groups, legal experts, and government transparency advocates are now demanding that multiple DGI board members immediately recuse themselves from all decision making as an independent investigation into the organization’s financial and lobbying activities unfolds.
Board members, City Council, campaign donors and Greensboro employees have reportedly accepted complimentary tickets to sporting events, gala's, concerts, and high-dollar meals, all funded by DGI’s budget financed by Greensboro and Guilford County taxpayers.
Examples include two dinners for DGI board member Andy Zimmerman paid for by DGI CEO and City Councilman Zack Matheny in Wilson, Wyoming, one for $181.76 and another for $281.26.
IRS rules strictly prohibit tax-exempt organizations from providing private benefits to insiders. Violations can result in personal excise taxes, fines, or even revocation of DGI’s nonprofit status.
Zimmerman, while serving on DGI's board with Greensboro Mayor Nancy Vaughan, secured a $150,000 city loan modification in 2021, shortly before donating $1,000 to Mayor Nancy Vaughan’s campaign.
North Carolina law (N.C.G.S. § 14-234) prohibits public officials from voting on matters that financially benefit their associates.
Vaughan, Greensboro's City Manager and Councilmember Nancy Hoffmann also had lunch paid for by taxpayers via Matheny in 23-4, among other Greensboro officials and employees.
N.C. Gen. Stat. § 138A-32 prohibits public officials from accepting gifts from entities that:
Receive government funding (DGI gets money from the City of Greensboro and Guilford County).
Lobby or do business with the city (DGI advocates for downtown projects).
DGI’s meals for Vaughan, the City Manager and Hoffmann were not disclosed as gifts in ethics filings.
Since DGI is funded by the city and lobbies the city, these meals appear to be attempts to influence officials.
North Carolina’s ethics laws require officials to recuse themselves from decisions involving entities that give them gifts.
Under 18 U.S.C. § 201 (Federal Bribery Statute) and N.C. Gen. Stat. § 14-217 (State Bribery Law), it is illegal for:
A public official to accept anything of value in exchange for official action.
A third party (like DGI) to provide benefits to officials who control their funding.
DGI’s budget is approved by the Greensboro City Council, the same body that Vaughan and Hoffmann sit on with Matheny.
If DGI used public funds to pay for meals for city officials, it may violate:
N.C. Gen. Stat. § 14-90 (Embezzlement of Public Funds)
IRS rules banning private benefit from 501(c)(3) nonprofits.
Zack Matheny (DGI President/City Councilmember) may have violated:
N.C. Gen. Stat. § 120C (Lobbying Law) – Requires registration for paid lobbying.
IRS rules – Nonprofits cannot engage in undisclosed political lobbying.
Several of DGI’s expenditures, particularly meals, event tickets, and hospitality provided to public officials, likely violate North Carolina’s gift prohibition laws.
N.C.G.S. § 138A-32 bans public servants (elected officials, city managers, etc.) from accepting gifts from:
Lobbyists (if unregistered, like Zack Matheny).
Organizations that employ lobbyists (DGI).
Entities that do business with or receive funding from their government (DGI gets city money).
DGI is funded by the city and lobbies the city (via Matheny).
These meals were not reported as gifts on ethics forms.
No exception applies—officials cannot accept anything from DGI under § 138A-32.
Greensboro City Council faces pressure to freeze DGI funding until the investigation concludes.
Quote from a Government Ethics Attorney:
“This isn’t just about bad optics—this is about potential felonies. If board members don’t recuse now, they’re inviting legal disaster.”
What Should Happen Now?
Independent investigation by the NC Ethics Commission or State Bureau of Investigation (SBI).
Full disclosure of all meals/gifts between DGI and city officials.
Criminal referrals if evidence of bribery or embezzlement exists.
The public deserves answers.
