Where’s the money gone?

The Tri-Valley Community Foundation is in rough financial waters, facing questions of poor financial management, misapplying donations, making promises it couldn’t keep and ongoing overspending that’s left the agency nearly $175,000 in debt.

The foundation has ousted David Rice, who as president was the public face of the charity for years, after an audit showed money had been spent and promised without approval from its board. Recent tax returns also show the foundation has been spending more than it’s taken in every year for the last four years.

Still, Ron Hyde, who has stepped in as president in addition to being board chairman, said he’s “optimistic but realistic” that the Tri-Valley Community Foundation can recover.

Hyde said he and the board are working to stabilize the organization.

“Nobody is going to lose any money,” Hyde said. “We can and will get things worked out to everyone’s satisfaction.”

However, the foundation’s financial situation is likely to worsen.

Sandia National Laboratories in Livermore, had planned to shift its employee donations to the United Way of Central New Mexico in Albuquerque next year, where Sandia is headquartered, but has now decided to move its donations there immediately. It also has concerns about how its previous donations to the TVCF have been spent.

“TVCF misapplied a portion of the contributions sent to it for distribution on behalf of Sandia employees,” an internal Sandia memo said. “We do not yet know the extent of this problem, and we have asked TVCF for immediate clarification and documentation of the past four campaigns dating back to 2008. The reconciliation process with TVCF could take 60 days or more. TVCF has stated that it will return available funds for the current campaign to Sandia.”

Other contributing agencies, such as Hacienda Helping Hands, are taking a wait-and-see approach before committing any funding to Tri-Valley Community Foundation for the current year.

Tax returns from the foundation show a pattern of overspending that began in fiscal year 2006-07, when the charity brought in nearly $1.36 million, but spent more than $1.6 million, drawing down existing assets. That’s been a consistent pattern since then, which led to a deficit of more than $172,000 in July 2010, the last year returns were available.

In fiscal year 2007-08, the foundation received a bit less than $971,000, but spent more than $1.4 million, again drawing down assets, leaving it with slightly less than $804,000 in assets.

By the 2008-09 fiscal year, those assets had dwindled to just under $253,000. That year, according to a revised tax return, the foundation took in about $869,000 with a loss of more than $125,000 in investments and an overall loss of almost $550,000.

The Tri-Valley Community Foundation only made about $209,000 in donations and grants that year, with the bulk of its money going to salaries, at about $341,000, and just over $732,000 in what’s called “other expenses” on its income tax statement.

In 2009-10, “other expenses” had climbed to just over $1 million and salaries had grown to nearly $418,000. The tax return for the year also claimed 108 employees and 50 volunteers.

That year, the foundation received more than $1.4 million in donations, but spent more than $1.9 million, leaving a one-year deficit of $445,511, most of which was covered by existing assets, but leaving it $172,344 in the red.

Hyde is quick to point out that there’s no evidence that Rice used foundation money for himself.

“According to our accountants and our attorneys we have no evidence that David enriched himself in any way,” Hyde said.

Rice is not named as an employee on the tax returns until the 2005-06 fiscal year, when he was paid $85,000 a year until 2009-10, when he made $98,571.

He apparently made a number of financial commitments that the foundation couldn’t cover, including at least $90,000 that was promised to three local organizations: Open Heart Kitchen, the Pleasanton School District for adult education programs, and $5,000 for the Rotary Club of Pleasanton’s Spirit Run on Father’s Day.

“He spent money without the board’s approval or knowledge,” Hyde said.

At least part of that questionable spending was to pay the salary of Melodie Lane, who was hired as the foundation’s corporate and community relations officer. Hyde said Lane was hired and paid from July 2011, but the board didn’t authorize her position until last November. Her salary was not available.

The foundation also employed Suzanne Lawless, a doctorate degreed researcher, who was in the process of writing the foundation’s annual report when she was terminated by Rice. Her salary, too, was not available.

After Lane and Lawless left, there were only three other employees, including Rice, in the foundation’s spacious wood-paneled offices in Suite 206 of an office building at 5674 Stoneridge Drive, across the parking lot from the Superior Court of Alameda County.

The foundation also paid former area television personality Mark Curtis $94,500 over about 39 months — about $2,400 per month — to write press releases, develop marketing campaigns, handle press relations, and emcee events, along with writing and hosting a bi-monthly TV show, “Tri-Valley Community Focus,” at TV30.

Curtis said he was let go about three weeks ago, when the foundation’s financial situation came to light.

Tax returns for 2008-09 and 2009-10 show an annual donation of $10,000 to a Buddhist center in Boulder, Colo., and, in 2009-10, a donation of more than $75,000 to the Oakland Police Emergency Net, which helps officers in need and the survivors of those killed or injured in the line of duty.

The Tri-Valley Community Foundation website says the foundation “serves the communities of Pleasanton, Livermore, Dublin, Sunol, San Ramon, Danville and Alamo.” However, for the two recent years in which donations are cataloged, Tri-Valley organizations seem to get short shrift, with much of the donations headed to San Joaquin County.

Tracy Interfaith Ministries got $40,000 — $20,000 in both 2008-09 and 2009-10 — and McHenry House in Tracy got $30,000, $20,000 in 2008-09 and $10,000 in 2009-10. The Boys and Girls Club of Tracy got $8,000 in 2008-09, and Good Samaritan Community Services, also in Tracy, got $7,000 in 2008-09.

In 2009-10, the foundation donated $10,718 to the California Transplant Donor Network in Oakland and $10,175 to the San Francisco Shakespeare Festival, along with $5,000 apiece to UC Berkeley and to the US Davis Alumni Association.

That’s not to say local organizations got nothing. Axis Community Health Center, Open Heart Kitchen and Senior Support Program each received $8,143 in 2008-09, and Axis Community Health, Open Heart and Tri-Valley Haven each received $16,667 in 2009-10. The Livermore Chamber of Commerce got $5,280 in 2009-10, and the Rotarian Foundation in Livermore got $11,794 that same year.

Donations made by the Tri-Valley Community Foundation in other years were not listed on tax returns for years; in 2001-02, however, that list is much more local, including $10,000 checks for Valley Community Health Center and Tri-Valley Haven, and a number of smaller checks for arts, schools and health services. The foundation’s matching donations to the Pleasanton Weekly’s annual Holiday Fund and its annual donations to the Rotary Spirit Run are not listed on recent returns.

The foundation’s website claims it is committed to building a permanent endowment for the area. As of the 2008-09 fiscal year, it had put aside $61,274 for that purpose, but that fund was apparently wiped out by the next year.

A local tax expert who asked not to be named had a number of concerns after looking over recent tax returns. Topping the list was that net assets had dropped from $1.4 million in the 2005-06 tax year to negative $170,000 this year. Beyond that, the expert questioned whether donor-advised funds (donations in which the giver asks that his or her money be used for a specific purpose) had been tracked appropriately, and the money that’s listed as held for others was handled properly. The expert noted that by 2009, the majority of those funds had apparently been used by the foundation.

In addition, the expert worried that about a third of the its annual expenses are for “undisclosed program services.”

“The returns are very vague,” the expert said. “They state that the purpose is to make grants but no grants are disclosed and there is a huge amount of program overhead costs.”

Finally, according to the expert, investments made by the foundation should have been done more conservatively. The expert pointed out that the foundation took a loss on its investments in the 2008-09 tax year, and that in 2009-10, 98% of the foundation’s cash “was sitting in non-interest bearing accounts.”

The number of TVCF board members has dwindled in recent years, too. In 2002, the Tri-Valley Community Foundation listed 24 members, including a chairman, four vice chairmen, a secretary and treasurer and 16 board members. By 2005, that was down to 11 members, with no treasurer listed.

Currently, its website lists six members: Ron Hyde, chairman; Don Lewis, vice chair, nominations; Kenneth McCartney, CPA., vice chair, finance; Kit Niemeyer, secretary; and Michele Matsumura and Michael Santimauro listed as board members. Matsumura said she resigned from the board in July, 2011 because she was too busy to attend meetings. The website still lists Rice as foundation president.

Hyde said he thought Rice was using the foundation to make himself look good.

“He told us what he wanted to tell us and even our CPA couldn’t see where the money was going,” Hyde said. “Once we terminated Mr. Rice, it’s been a month of uncovering the reckless spending, the huge grants made without the board’s knowledge or assent.”