Posted by Editor on June 09, 2003 at 18:07:29:
http://www.dailypress.com/news/local/dp-11282sy0jun03,0,4688482.story?coll=
AIDS nonprofit gets new name
probe of former exec continues
By Beverly N. Williams
Daily Press
June 3 2003
NEWPORT NEWS --
A local nonprofit that serves people living with HIV/AIDS is under new management and a new name as an investigation continues into claims a previous executive director mismanaged its finances.
A former director of the Peninsula AIDS Foundation in Newport News was terminated for failing to submit "payroll taxes to the IRS and committing other significant acts of mismanagement," according to a statement the agency filed with the Internal Revenue Service last year.
The result of this mismanagement, the foundation wrote, was "chaos."
And it has forced the charity to recreate itself as a separate nonprofit as its board struggles to stem its losses and pay creditors, according to the IRS statement. It will now operate under the name Greater Peninsula Care Foundation, said one agency official.
"We had to do some reorganizing because of mismanagement by the old organization," said Ed Sedwick, the agency's volunteer coordinator. "We're still carrying on PAF's mission, but one thing we're trying to do is get the new name out into the community."
Both Sedwick and Marci Coleman-Smith, the Greater Peninsula Care Foundation's director since last October, refused to provide details about the problems, including who was responsible or who is investigating. Sedwick would say only that an investigation is ongoing. Coleman-Smith said agency officials have been advised not to comment because the Peninsula AIDS Foundation is not officially dissolved.
The AIDS Foundation's IRS statements describe money problems in fiscal years 1999, 2000 and 2001.
The fiscal year 2001 IRS statement, filed by Coleman-Smith and received by the IRS in March 2002, indicates the charity conducted an investigation of the mismanagement and blames the former executive director for its "tumultuous" year.
The statement is an addendum to the AIDS Foundation's annual operation and financial report to the IRS, called a Form 990, which is required of all public charities. It covers the tax period from July 1, 2000, to June 30, 2001.
Eileen Seal became the foundation's executive director beginning in 1996. AIDS Foundation officials refuse to say when she left, but a Daily Press story published in January 2001 indicates she left on Dec. 29, 2000. Seal could not be reached for comment.
In February 2001, foundation officials asked the IRS for more time to file its financial report for fiscal year 2000, saying it was "experiencing financial difficulties," IRS records show. They said a significant turnover in personnel in their accounting department, including the finance director's departure in 2000, left the agency's financial records in "disarray."
The extension request also said the agency was working with the IRS to resolve the payroll tax issues.
IRS spokeswoman Gloria Wajciechowski in Richmond could not confirm whether the agency is or was investigating the AIDS Foundation or Seal.
"Because of federal disclosure laws," Wajciechowski said, "we cannot say if we're investigating anyone or not."
The Peninsula AIDS Foundation was founded in 1987, in response to the AIDS epidemic on the Virginia Peninsula. Virginia has more than 13,000 reported cases of HIV and AIDS, Sedwick said.
The Greater Peninsula Care Foundation has more than 300 clients, all of whom were initially with the Peninsula AIDS Foundation. Their services and needs have not been interrupted by the management problems, Sedwick said.
The AIDS Foundation was part of a network of AIDS service organizations that offers services to people living with HIV and AIDS, their families and their loved ones. Services included case management, housing and food assistance, medical and dental care, transportation assistance, support groups and HIV/AIDS education outreach.
The AIDS Foundation's revenue was nearly $1.08 million in fiscal year 2001, according to the IRS records. But with expenditures close to $1.14 million, it ended the year with a deficit of more than $63,000.
It also reported losses of $119,498 in 2000, and $5,000 in 1999.
The AIDS Foundation's budget this year is slightly more than $902,000. Funding sources include $21,500 from the city of Newport News, according to city records. The agency did not, however, request city funding for fiscal year 2004.
Last year, an outside accounting firm was brought in to try to correct the foundation's computerized records, the IRS statement notes. Instead, the statement says, the firm mistakenly locked up the system, "destroying all of the agency's computer records in the process."
A second accounting firm confirmed the data was irretrievable, the statement says, and the agency had no backups or other written records to use to file its IRS return.
"There is no general ledger, no cash receipts or cash disbursements journal, no financial records of any sort, other than the bank statements and some canceled checks," the statement reads. "Even then, a few bank statements are still missing."
So the AIDS Foundation cobbled together what information it could salvage, according to the statement the agency filed with its tax forms in 2002. The foundation filed its IRS Form 990 "in a good faith attempt to comply with the Internal Revenue laws without the benefit of books or records," the statement says.
"The agency does not know and cannot determine whether the estimated allocations for June 30, 2001, are reasonable due to the lack of records," the statement reads. While the agency estimated the accounts receivable and payable, it adds, it "can provide no assurances that the information is accurate, again based on the lack of records."
As a tax-exempt group, the Peninsula AIDS Foundation is required to file an IRS Form 990 because its gross receipts total more than $25,000. Nonprofits that fail to file face a penalty of $20 a day. The same penalty applies if an organization fails to provide correct and complete information.
In 1993, the Peninsula AIDS Foundation became a partner agency with the United Way of the Virginia Peninsula and, thus, eligible for money from the organization's fund-raising campaigns. Peninsula United Way Records show the AIDS Foundation received $60,294 in 2001-2002, $60,267 in 2000-2001, and $75,000 in 1999-2000.
The agency's financial woes ended that partnership in the spring 2002, however, because AIDS Foundation officials were unable to submit a viable financial audit, said Patti Mantey, vice president of marketing and communications for the Peninsula United Way. And, despite the recent reorganization, Mantey said, the Greater Peninsula Care Foundation will not receive funding from the United Way's upcoming campaign because it did not complete certification papers that were due last month.
Coleman-Smith said the Greater Peninsula Care Foundation's main sources of funding are the U.S. Department of Housing and Urban Development, the Ryan White Title I Program, the Virginia Department of Health, and the Housing Opportunities for People With AIDS program, all state and federal agencies.
To help the Greater Peninsula Care Foundation, Coleman-Smith said, the AIDS Foundation's board of directors stepped aside and wrote letters of endorsement to grant sources asking them to continue their funding.
"Things happened, but that doesn't mean the organization needs to go down," Coleman-Smith says. "We just couldn't do it under the PAF name."
Beverly N. Williams can be reached at 247-4755 or by e-mail at bwilliams@dailypress.com