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Baltimore City Foundation Gets Off Easy

The City Council's Judiciary and Legislative Investigations Committee met yesterday for an investigative hearing on the Baltimore City Foundation, a nonprofit formed nearly 30 years ago to raise money for city programs for the underserved. The Baltimore Sun published an article last fall revealing that the little-known foundation was lacking in oversight and accountability, and had spent some money in ways that seemingly had nothing to do with its mission. At the time, some longtime members of the City Council said they did not even know the foundation existed.

Since the problems with the foundation first came to the council's attention last fall, the committee has been gathering reports from city agencies documenting their involvement with the foundation. At the meeting, committee chair James Kraft (D-1st District) held up a stack of reports from numerous agencies, including the Health Department, the Office of Emergency Management, the Housing Department, the Fire Department, and the Baltimore Development Corporation.

Though the Sun article revealed several instances of questionable spending on the part of the foundation—including thousands of dollars for former Mayor Sheila Dixon's inauguration festivities—the hearing did not focus on them. "Our review of these documents indicates that the vast majority, we're talking 95 percent, is stuff the city wants to do and that . . . the citizens want the city to be doing," Kraft said. "The problem has been that it really hasn't been up front."

By giving money to the city through the foundation, donors are able to earmark their dollars for specific projects and benefit from a tax deduction. If they instead give the money directly to the city, it cannot be earmarked and there are no associated tax benefits. But, committee members complained, foundation funds have thus far been entirely invisible elements of agency and department budgets. "It's of value to us to know how much money is coming into these different agencies and departments because we're being asked to face significant cuts this year," Kraft said. "So for us to make a responsible decision, we have to have a full picture of all funds that are available to a department or an agency."

Foundation board member Ed Gallagher, who also serves as the city's finance director, argued that the myriad city agencies ought to report what funds they receive from the foundation to the city. "I think the source of that information is the agency, not the foundation," he said. He argued that the foundation is unable to predict what sort of funds it will receive in a given year. The debate went back and forth for much of the hearing, and concluded with a suggestion by Gallagher that council members decide internally who should be responsible for providing information to the City Council on foundation funds.

Another question the Sun investigation raised was whether or not city employees had been soliciting funds for the foundation, a breach of ethics. Committee members made no specific accusations on this count, but the foundation is currently working with a staff consultant from Maryland Nonprofits, an organization whose stated mission includes "promoting the highest standards of ethics and accountability in nonprofit governance and management."

Lenwood Ivey, the foundation's president, said at the hearing that the foundation was undergoing a "thorough review," and had so far instituted a conflict of interest policy and a whistle blower policy. He said the foundation's funds currently hover around $6 million.

The next step in the council's investigation is for Maryland Nonprofits to submit a report on its work with the foundation to the council. "If we believe it's necessary to open the hearing back up at that time, we will," Kraft said. "But I think given the information that we've received . . . we're moving in the direction we want to be moving in."

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