The new Chetco Activity Center board of directors was barely seated this month when it received a letter from the Oregon Department of Justice (DOJ) requesting it to produce its ledgers, investment accounts, grants and other financial documents — dating back to 2015 — for evaluation.
The DOJ is requesting the information based on “confidential complaints” made to the agency that raised a variety of concerns, according to a Dec. 3 letter from Charitable Audit Coordinator Lottie Zorn.
Among the items required to be submitted include general ledger reports for all accounts from those years, and all bank account records, including monthly statements, canceled checks and deposit listings.
Also required are investment account records, their detailed statements and transactions; all documents related to gifts of $500 or more; and grant applications, budgets, reports and documentation supporting the expenses paid from those funds.
The board is also requested to turn over all documents related to government funding or contracts since 2015, including proposals, contracts, service agreements, invoices and reports, and documentation showing how the money was spent.
The DOJ also wants all minutes of board and committee meetings and any actions that came of them, and all of the organization’s internal policy and procedure manuals relating the governance, finances, investments, bookkeeping and internal controls.
It also notes in the last paragraph that “changing or destroying them is a crime under the Oregon criminal code.”
The nine-member board has until Jan. 11 to produce the documents — and the DOJ is reserving the right to request more, based on questions they might have about the material submitted.
“It’s a lot of work,” said activity center treasurer Glenda Groff said, “but it’s certainly not unwelcome.”
Groff said the investigation is a mixed blessing.
“I have no idea what it’s all about because I didn’t initiate (the complaint),” she said. “Someone went to the Department of Justice saying there was an irregularity in our accounts; as treasurer I know there is not.”
Of concern to her is funds that remain — almost $1 million — contributed by CAC founders Virginia Manley and Marilyn Perry in 1978 to buy the land and build the center. In 2005, half of Perry’s portion was used to build an outside terrace — Marilyn’s Terrace — overlooking the town.
“Those two ladies basically started the senior center,” Groff said. “They wanted it to endure forever and felt it was possible by leaving the funds. It’s our fiduciary duty to keep it operating and healthy and fulfilling our mission to serve seniors in the Brookings-Harbor area.”
The board put the remaining funds into an investment fund, which has the board in its current predicament. Most board members believed over the years that it was a dedicated endowment to be used only for major capital improvements and repairs to the center, Groff said.
But because it was in an investment fund and technically not allocated for a specific use, the board used some of the money to hire an executive director in 2014-15. The director and a kitchen staff member were let go that fall.
Things quickly came to a head, with then-board president Thayne Groff noting that grant funding for the center was expiring, the board had spent the money it had in its CDs and money markets and the center was using up to $8,000 a month of the money intended for capital improvements for day-to-day operations.
The money today
Groff noted that if the funds are in an investment fund, future boards can use the money almost as they please.
But many on the board believe Manley and Perry intended the money to be used as an endowment, thus protecting it for any other uses than capital improvements.
“We’re working to protect that investment so it can’t be spent for operations,” Groff said. “We have it in the bylaws, that it can only be used for capital expenses, but the DOJ tells me it’s difficult for one board to protect money from a future board.”
She said the DOJ is working with the nonprofit to protect that money as it was intended. And it has Groff scrambling through paperwork dating back to the late 1970s to prove it was intended as an endowment.
“The money was not designated — that we can find the paperwork for,” Groff said. “People think (the founders) wanted it to be designated (solely for capital improvements). We’re trying to find a written document because the DOJ says one board cannot bind another board in perpetuity. We could say the money is only for capital improvements, but the next board could overrule that.
“Most boards have honored it, but that’s the little problem we have now.”
The center has had other problems of late, including turmoil on the board, kitchen and Meals on Wheels violations and a continued need for volunteers.
“But I truly do not understand why it feels like someone wants the center to fail,” she said of whoever complained to the DOJ. “I look out over the room and we have all these tables every day, people have lunch together, play cards, do tai-chi — who could want to disrupt this? I just don’t understand. We’re working hard to keep it running smoothly.”