April 9, 2017; Ventura County Star
NPQ has, over the past nine months, covered the travails of the Ventura County Community Foundation, which was one of two local foundations that oversubscribed to the plans of the same overambitious CEO, Hugh Ralston. Ralston is now long gone from both, but the Ventura County Community Foundation is still struggling to free itself from its self-imposed problems. Here is what we wrote at the time:
As Ralston exited Central Valley, newspapers in Ventura County were reporting on the results of a seven-month review by accounting firm KPMG, which found that some donor funds at the Ventura County Community Foundation had been undervalued as a result of mismanagement dating back to Ralston’s tenure. Among other things, KPMG found that some permanent funds had been invested in low-interest money market accounts and excessive administrative fees charged to some funds. The state attorney general’s office has been informed and will be guiding the foundation on how to make it right with the donor accounts out of its unrestricted revenue.
But these additional liabilities are simply more straws on the camel’s back. Ralston oversaw the purchase of a 55,000-square-foot building during his tenure that was to house the foundation’s offices and provide below-market-value lease space to qualifying nonprofits. That building, after improvements, represented an investment of about $11.3 million. Four years later, that building was first listed for $11 million, but that asking price was later lowered to $9.8 million. Meanwhile, the Ventura foundation’s staff has been reduced from 22 to five, and those employees that stayed saw cuts to their pay of 20 percent. Its 24-year-old Center for Nonprofit Leadership, a capacity-building operation, was also closed.
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Now, this article from the Ventura County Star reveals that the foundation has refinanced its headquarters to start repaying the $1.8 million (plus almost $400,000 in interest) that disappeared from the funds under its stewardship. The figures owed are based on independent audit and an investigation by the state attorney general’s office.
The report was shared with the public. According to the Star:
- About $1 million is tied to investments held in low-earning money-market accounts rather than the foundation’s investment pool.
- An additional $540,000 will be restored because interest was over-allocated to the agency’s operating budget, fees were wrongly figured based on the type of fund and for miscellaneous reasons.
- Finally, about $160,000 will be paid to five funds because fees were charged beyond what the donors stipulated in written contracts.
Foundation trustees and former leadership were found at fault for, among other things, using $3.8 million in endowment funds to pay for the headquarters building. And, on top of that very public disclosure, the new CEO has been meeting personally with representatives of the funds to offer explanations and plans about how the money and trust will be restored.
All of this openness may almost be enough to restore some measure of trust in the institution, but only if it is able to demonstrate a very high level of competence in its current administration of funds. The Star ended its report with one (now withdrawn) fund’s concerns about late financial reporting, a problem the current CEO says is now being addressed.—Ruth McCambridge