Nonprofit Newswire | Mental Health Agency and Affiliated Foundation Need an Intervention

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July 13, 2010; Source: Smoky Mountain News | In western North Carolina, a state-funded mental health agency and a formerly affiliated nonprofit foundation are at war. The state agency, the Smoky Mountain Center, says that the nonprofit, the Evergreen Foundation, has “strayed from its mission and needs realignment.”

SMC established the Foundation many years ago as a “type II supporting organization” to provide funding for the Center, including the Center’s capital (space/facility) needs. Evergreen counters that the Center is trying to control the foundation and its finances, “raid(ing) the foundation” for its $20 million in assets. The Center wants Evergreen “to come back under its auspices rather than operate independently,” a position supported by the commissioners of all seven western North Carolina counties.

On its own volition, Evergreen changed its mission statement in 2009 to remove language about its purpose as a supporting organization for SMC. Why? One reason might be that in the past, both organizations had the same executive director, Tom McDevitt, but two years ago, he left the SMC under less than amicable circumstances, but retained his position running the Foundation.

Depending on the news source, some $13 million to $14.5 million in public (local and state) funds have gone to Evergreen between 1997 and 2009 plus $3 million to $4 million in rent payments (and additional funds for purchase and renovation of facilities). Believing that public funds given to a nonprofit makes them private and not subject to public scrutiny, the foundation appears to have received substantial revenues for several years while spending (or granting out) relatively little: (based on NPQ’s look at Evergreen’s 990s) FY2008 total revenue $2,242,891, total expenditures $561,976; 2007 revenues $2,748,886, expenditures $549,136; 2006 revenues $2,716,608, expenditures $493,077.

In response to criticism, Evergreen has begun giving out more money in grants, though aiming to add organizations other than SMC, since SMC is no longer the region’s only mental health provider. It seems to us that this scrap is silly and unproductive, the state’s mental health agencies and the state attorney general ought to be intervening to figure out—in the open, with public disclosure—just what is happening and how the issues between the two organizations can be resolved.—Rick Cohen