August 6, 2015; Sarasota Herald-Tribune
Two months ago, NPQ published a newswire about the Center for Building Hope, a cancer-related organization in Sarasota. The Sarasota Herald-Tribune was doing an investigation of the group, which had recently hired Carl Ritter, a new executive with questionable credentials including a personal bankruptcy and a career with a failed business called Carbiz whose business model was based on extending credit for cars and then repossessing same. He soon convinced the board to buy the Oregon-based Making Memories Breast Cancer Foundation of America as a social enterprise. That organization had the distinction of having been named one of Oregon’s 20 worst charities. The organization started losing money at an unprecedented rate, and by June the center had logged the biggest loss in its history.
Last week, Ritter was finally fired, followed this week by the layoffs of six additional employees, including Ritter’s children. (Ritter’s daughter Ashley was director of sales and his son Justin served as logistics director.) Five fundraising events have been cancelled, remaining staff have been told payroll is to be delayed, and three consultants have been installed to untangle the mess.
Some former employees describe the family as enormously dedicated to the charity. Event marketing coordinator Ashley Zipf, for example, says the portrayal of the Ritter family in this situation has been unfair. “A lot of the attention was put onto Carl, mostly focusing on his salary, but other people who have stayed have large salaries, too. Why is no one looking at them?”
Apparently, the increasingly lucrative gig finally went truly sour when the board found out that Ritter had established a company to process credit card transactions for Brides Against Breast Cancer, charging a 16 percent fee, which is approximately eight times the normal amount. Two board members, Dave Shaver and former board chair Jim Braun, resigned when Ritter left after it was established that they knew about the arrangement.
Maybe because those other CEOs had not heaped on top of their salaries massive financial losses, nepotism, and undisclosed conflict of interests?
Additionally, there is evidently no contract between the Center and the payment processing company owned by the Ritters. “It’s like, holy crap,” said a shocked Mark Pritchett of the Gulf Coast Community Foundation, who has been quite open about his opinion of Ritter’s operation. “You’re using a vendor and you don’t have a contract with the vendor. It’s just all around bad.”
The fact that there was no contract is perhaps unsurprising in light of the way the business functioned, described here by the Herald Tribune:
“Former center information technology employee Rusty Harris said he set up the feature that sends money from credit card transactions into Carol Ritter’s bank account. The Ritters take the processing fee and forward the rest of the money to Brides Against Breast Cancer so it can pay dress show expenses and manager commissions. Whatever is left over goes to the Center.”
Ritter, it seems, knew a mark when he saw one, moved in to take as much as he could as quickly as he could, and is now still being defended by some former board members. It’s hard to find a lesson in this mess because we just don’t think most boards would have collectively ignored this many red flags, but one thing is sure: Any board who refers to their executive as a savior, or even implies that he or she is one, and which delegates fiduciary decisions to a small number of insiders runs the risk of forever ruining the reputation and potential future of the organization.—Ruth McCambridge
Correction: This article has been altered from its original form. The initial release confused the roles of former employees Ashley Zipf and Marisa Merlino. NPQ apologizes for the error.