June 7, 2015; Sarasota Herald-Tribune
According to the Sarasota Herald-Tribune, the most recently filed 990 for the Center for Building Hope in Sarasota, Florida, shows a deficit of more than $785,000, the largest in its history. Last year, the nonprofit was six months late in making required payments into employees’ accounts. It blew off loan payments to a local community foundation that had lent it money to buy another failing nonprofit that was also in deficit. Meanwhile, the salary of the CEO, Carl Ritter, has almost tripled to more than $335,000 since 2010 when he joined the organization.
Ritter was chosen for his business credentials. If this article is accurate, a look at his track record reveals a pattern pretty quickly.
Where to start?
Apparently, once hired by the Center, Ritter sold the board on a social enterprise, so the Gulf Coast Community Foundation loaned the Center $675,000 in 2011 to buy and expand a small nonprofit based out of Oregon that sells donated wedding dresses, according to Mark Pritchett, the Foundation’s senior vice president for community investment. The Making Memories Breast Cancer Foundation of America had distinguished itself by making the Oregon Department of Justice’s “20 Worst Charities” list in 2011 due to the fact that it devoted only 12 percent of its donations to programs. At that point, the Center had an operational deficit of $650,000.
Though Ritter describes the wedding dress endeavor as a success that is producing a profit, it may be that some of the costs of the social enterprise are hidden. This report states, “The Center’s new venture caused overhead costs to go through the roof. The board spent more than $1.5 million on salaries in 2012—a 55 percent increase from the previous year.”
The Community Foundation began to get a real sense of Ritter’s management style at that point. First, Ritter stopped sending financial updates, Pritchett said. Then, in December 2014 and in March 2015, the Center neglected to send the agreed-upon payments of $24,000 apiece.
“When they weren’t sharing information with us like they had been and then they’re late with payments, that changes the business relationship because they’re not filling their part of the bargain,” Pritchett said.
The Gulf Coast Community Foundation spoke with the Center about the loan at least seven times in the last five months and it intends to follow through. “We’re not going to turn our heads,” Pritchett said. “We’re going to jump into it and make sure no laws have been broken and people are on top of this thing. If organizational changes need to occur they’re going to occur.”
Ritter seems unfazed by the fact that he has driven the community foundation to speak out publically about the Center’s management. “A business like ours,” he says, “there is always going to be a quarter of a million dollars of payables.”
Dave Shaver, a longtime board member, says that the organization first got into trouble when, pre-Ritter, it began a capital campaign and building project right as the recession hit. In this, the center was in good company—many nonprofits did the same things and got caught in the same kind of chokehold, though it does seem that the board was not as clear on what was occurring as it should have been. “We were too stupid to realize that we had an operational deficit because we had a lot more money coming in the door than we were spending, but it was designated for the building,” Shaver said.
When the former CEO moved on, the organization had an outstanding debt of $3 million left over from the $5.5 million in recession fueled debt associated with its building. Accordingly, the board decided to look for a business-oriented person to lead them. “We needed someone with more of an entrepreneurial mindset that might help us figure out some creative ways to dig ourselves out of this,” Shaver said. The headhunter the organization used was already representing Carl Ritter, who was out looking for a job, and recommended him despite the conflict of interest.
Neither the headhunter nor the Center’s board caught on to the fact that his references were colleagues from a very failed business venture. After filing for bankruptcy for the second time, Ritter went to work at Carbiz, a chain of “buy-here, pay-here” used car lots that changed interest rates weekly and moved quickly to repossess vehicles when buyers fell behind. Over five years, though Carbiz lost almost $42 million, Ritter’s salary more than tripled; in 2009, Ritter was paid $802,000—including a $500,000 bonus. And so the pattern was set.
So who better to run a charity for cancer survivors (into the ground)?
Of course, Ritter has the support of both his son and daughter, reportedly also on payroll at the center.—Ruth McCambridge