October 29, 2009|By Annie Linskey and James Drew | Annie Linskey and James Drew,annie.linskey@baltsun.com and James.Drew@baltsun.com
The Baltimore Board of Estimates on Wednesday blocked a company's payment to the embattled Baltimore City Foundation, and the city comptroller called for a halt to all donations to the private nonprofit group amid questions about how it oversees spending.
Later in the day, Mayor Sheila Dixon called for an outside consultant to recommend new oversight procedures for the city-controlled foundation, her strongest response since a Baltimore Sun investigation revealed questionable transactions by public employees using charity money.
As inquiries continue about whether the group's board of directors employs adequate safeguards to ensure that donations are properly spent, City Comptroller Joan M. Pratt requested that a scheduled $50,000 payment to the foundation set for approval on Wednesday be sent directly to the city's coffers.
"Right now, I think contributions made for the benefit of the city should go directly to the director of finance," Pratt said, adding that foundation board members "don't have the appropriate oversight." She later said she wanted to review five years' worth of independent audits before donations resume. The Board of Estimates did not act on that suggestion.
Dixon acknowledged the need for what she called a "comprehensive" evaluation of foundation board practices. "This is an opportunity to be aggressive in reviewing the current structure and operations" of the foundation, she said in a statement.
The oversight issue emerged as the Board of Estimates, a powerful spending panel controlled by the mayor, was set to approve a legal settlement with a company that violated minority and women-owned business requirements on a multimillion-dollar landfill expansion. As part of the proposed penalty, American Infrastructure, Inc. was to have donated $50,000 to the foundation for YouthWorks, a program backed by Dixon that provides summer jobs.
At Pratt's request, the $50,000 will be sent instead to the city's Finance Department, which will transfer the money directly to the Mayor's Office of Employment Development, which runs YouthWorks.
If the payment had gone to the foundation, American Infrastructure could have claimed a charitable tax deduction.
The Board of Estimates' unanimous vote, which included Dixon, came three days after the newspaper's investigation revealed that the little-known organization is a source of money on demand with little or no oversight. City officials wield broad discretion over how money is spent, and the foundation asks few questions.
Pratt has said previously that she will audit the city's involvement with the Baltimore City Foundation, and the scope will be determined after she reviews annual audits conducted by a firm hired by the nonprofit.
The foundation, formed in 1981 primarily to benefit the underprivileged, helps pay for such things as home smoke alarms, assistance to those who cannot pay their water bills and funeral expenses for homicide victims.
The newspaper found that some funds go to projects that have little or nothing to do with the foundation's tax-exempt purposes, a potential violation of Internal Revenue Service rules, legal and nonprofit experts say. Some was spent for Dixon's Christmas cards last year and for her inaugural activities in 2007. Foundation accounts also serve as a repository through which money for city projects can accumulate and be spent without the scrutiny typical for public expenditures.
The Sun's investigation did not identify any problems in the way donations to YouthWorks were handled.
The foundation's president, Lenwood M. Ivey, has said it is the city agencies' responsibility, rather than his or that of the foundation's board of directors, to ensure that foundation money is spent in keeping with its nonprofit status. Ivey did not return messages seeking comment yesterday.
Pratt praised YouthWorks on Wednesday, and said she was concerned that ensuing investigations of the fund could delay disbursement of money to a worthy cause..
"I know that there will be no problem if it comes directly to the city," Pratt said.
City Council President Stephanie C. Rawlings-Blake said she had also questioned the payment during a briefing earlier in the week.
"We asked, 'Why would it not go directly to the director of finance?' " Rawlings-Blake said.
The City Council president said she supports Pratt's efforts to audit the charity.
"My hope is the audit will reflect that the donations go to the appropriate places," Rawlings-Blake said.
Dixon said Wednesday's decision does not indicate a lack of confidence in the foundation and that she disagreed with the comptroller's suggestion to halt donations.
City Solicitor George A. Nilson, a member of the Board of Estimates, said he was not aware of any other firms that the city has required to make a contribution to the foundation to resolve alleged violations of minority and women-owned business requirements.
