City's 'Mother Teresa' fails on finances

THE BALTIMORE SUN

In Baltimore, when someone has something to give -- a Thanksgiving turkey, money from a school bake sale, a truckload of shoes -- Bea Gaddy is the likely recipient.

This 61-year-old woman, known as the "Mother Teresa of Baltimore," has made her name the stamp of approval for local fund-raisers. She also made herself famous, showing up everywhere from the "CBS Morning News" to the "Jenny Jones" talk show. Billboards with her likeness are expected to go up around town soon.

Just last month, Ms. Gaddy was inducted into the African-American Hall of Fame in Atlanta. The Bea Gaddy story is even being peddled in Hollywood: One-time welfare recipient goes from feeding her neighbors to feeding thousands at a Thanksgiving meal billed as the world's largest sit-down dinner.

But for all of Ms. Gaddy's popularity, her organization, the Patterson Park Emergency Food Center, appears chaotic and loosely run to those who know it best.

An examination of state and federal records required for charities finds a pattern of missed deadlines, missing paperwork and little documentation for the thousands of dollars her organization has received over the past decade.

The organization has lurched from crisis to crisis without developing a budget to carry it through lean times. Despite receiving an estimated $300,000 last year, Patterson Park was broke at the start of this year -- in part, according to Ms. Gaddy, because "I spend every cent as soon as I get it."

The organization's unstable financial situation underscores more serious problems including:

* Poor and incomplete financial records. Until last November, Ms. Gaddy had violated state and federal laws for nonprofits, failing to file disclosure statements required for charities that raise more than $25,000 a year, according to the Internal Revenue Service and the Maryland secretary of state's office.

In January, she filed partial disclosure statements for 1991 and 1992. But the charity failed to comply with a state law requiring audits for charities that collect $200,000 or more annually, which would have applied to 1992. She has never been audited.

The secretary of state's office waived the requirement but said she must meet it next year, assuming she again takes in more than $200,000.

Ms. Gaddy blamed a volunteer accountant, no longer with the organization, for not filing the paperwork with the IRS and the state. She has a new accountant, who now deposits all checks sent to Ms. Gaddy's post office box, while Ms. Gaddy continues to write checks.

* Sloppy and unorthodox operating procedures. Those familiar with nonprofits say they use traditional accounting methods, which include a separation of powers: One person deposits the contributions, for example, and another one writes the checks.

Ms. Gaddy says Patterson Park has such a system now. Until recently, however, she herself controlled all the money: Ms. Gaddy was cashing checks at a local check-cashing store, and using a receipt book to document the hundreds of dollars in cash she pays to workers each week.

"She has a receipt for everything," board member and adviser Dave Adams said. But when Ms. Gaddy showed The Sun a copy of her receipt book, pages were missing and several were filled out with vague notations, such as "Gary -- $50."

Ms. Gaddy is similarly informal about payroll taxes. She and her advisers concede that she has never paid Social Security or other withholding taxes for Patterson Park workers, even a driver who earns up to $100 a week. While the IRS is not permitted to discuss specific cases, an IRS spokesman said that for any employee earning $600 a year or more the law requires -- at minimum -- filing income tax Form 1099. Ms. Gaddy says she has filed no such forms.

Last year, Ms. Gaddy drew money from a Patterson Park checking account to pay a $120 fine assessed in connection with her unsuccessful 1991 race for a City Council seat. Federal law prohibits nonprofits from any activity on behalf of an individual candidate. Ms. Gaddy says she was unaware of the prohibition, even though it appears in Patterson Park's own charter.

* Fraud and theft. In one incident, a volunteer forged Ms. Gaddy's name on a piece of letterhead stationery and used it to secure a line of credit to purchase a BMW from the state agency for surplus property, according to state officials.

Ms. Gaddy said she was unaware of the car purchase until she received a dunning letter from Claude Misher, of the state's Department of General Services. After determining that Ms. Gaddy's signature had been forged, she was not held accountable for the car, said Dave Humphrey, a spokesman for that agency. He said the state never recovered the car because it was destroyed by an electrical fire.

Patterson Park also has been hurt by theft among shelter residents, Ms. Gaddy said. She said the problem became so acute last year that it forced a temporary shutdown of the charity's men's shelter.

* Internal chaos. It is virtually impossible to determine who sits on Patterson Park's board. Not even Ms. Gaddy knew for sure when asked.

At the state office where incorporation papers are filed, there are three boards listed: for Patterson Park, the now defunct Bea Gaddy Women's and Children's Center, and the Bea Gaddy Trust Fund, a Patterson Park subsidiary. A fourth list, at the secretary of state's office, includes a dead man and a man who says he has never attended a meeting. Asked about this, Ms. Gaddy said she is forming yet another board.

"I'm looking for a group of people to tell me what to do," Ms. Gaddy said. "Some of these people on my board right now -- they're just figureheads."

Historically, however, Ms. Gaddy has been loath to heed the advice of her board -- the typical relationship between a board and executive director. That was the problem for a well-connected board that included Ted Rouse, whose firm, Struever Bros., Eccles & Rouse, helped to renovate the charity's women's shelter. He and several others dropped out when construction was finished.

"She very much wanted to be in control and call all the shots," Mr. Rouse recalled. "I think, because of that, many of us on the board felt like it was best not to be in her way and let her have that control, if that's what she wanted."

Quick rise to the top

Bea Gaddy is such a familiar presence in Baltimore that many forget how recently she arrived on the nonprofit scene -- and how quickly her star, and finances, rose.

Ms. Gaddy's first dinner, as recounted by the Washington public relations firm that helps her for free, was an act of impulse: She invited 39 neighbors to dinner in 1981 with a lottery ticket's proceeds.

But she moved quickly to institutionalize her generosity, filing Patterson Park's incorporation papers three weeks later. By 1985, the nonprofit had tax-exempt status.

Then Patterson Park really took off. The media -- including The Sun -- discovered a charismatic interview subject in Ms. Gaddy. Articulate and energetic, she knew hunger and homelessness firsthand. She had an authority and intensity that more traditional social workers and nonprofit directors could not match.

She was charismatic, too. Board member and adviser Dave Adams recalls watching her speak to a group of people who already had paid $100 a plate for a fund-raiser. Her impromptu speech raised an additional $17,000.

It only added to her legend that she stayed in the tiny rowhouse in the 100 block of N. Collington Ave., sleeping in the basement as Patterson Park's files and goods took over the other two floors. Eventually, she deeded the house to the nonprofit, so its mortgage, taxes and bills could be paid by donations. Ms. Gaddy draws no salary from Patterson Park and says she has no personal income. It is unclear how she pays any expense not directly related to Patterson Park.

"She takes no income from Patterson Park," Mr. Adams said.

As her fame grew, the dinner grew: 2,500 came in 1988, 10,000 by 1990, almost 20,000 last year. Judges assigned people to do community service for her.

Donations soared. Tens of thousands flowed into the organization in the late 1980s. Now it's hundreds of thousands, in cash, goods and real estate.

The mission expanded, too. In addition to her two shelters, Ms. Gaddy has about 20 donated properties in various stages of renovation, to be turned over to poor families upon completion. She also tries to promote voter registration, job training, AIDS education and lead paint testing.

"Sometimes, we tell her 'Let's concentrate on just one thing,' " said Mr. Adams. "She can't. She can't say no."

Ms. Gaddy has a tough side, a talent for public relations and keen political instincts.

A run-in over shelter

Consider her memorable run-in with Housing Commissioner Daniel P. Henson III.

In January, when Mr. Henson's department tried to close her shelter on West Baltimore Street because of safety violations, Ms. Gaddy refused to budge.

First, she called U.S. Rep. Helen Delich Bentley, a good friend. Mrs. Bentley said she called city officials, trying to broker a compromise.

Meanwhile, Ms. Gaddy gave interviews, insisting that the city was evicting homeless people on one of the winter's coldest days. (According to the Mayor's Office for Homeless Services, ,, beds were available at other shelters and the city was ready to transport the residents to those shelters.)

Ultimately, Mr. Henson was forced to go meet with her to work the problem out. Walking a gantlet of cameras, he came face to face with Ms. Gaddy, who accused him of carrying out a vendetta against her. She claimed to have known nothing about the building's structural defects until that week.

But Mr. Henson said in an interview -- and another city source confirmed -- that Ms. Gaddy had been told about the building's code violations during the summer. Mr. Henson said she had promised the city to fix them if the City Council passed the legislation the shelter needed to operate.

After the standoff, Patterson Park spent more than $10,000 to bring the building up to code -- including bathrooms that had to be renovated, because the first workers botched the job, according to Ms. Gaddy and Mr. Adams. But Mr. Henson's workers provided major repairs at no cost and, as a result of the publicity, donations poured into the nonprofit.

"I don't think I'm an idiot in this business, but I've got to admit she upstaged me," said Mr. Henson, a savvy political operator. "I remember I said to someone as I left: 'I wonder how many thousands of dollars I made for her today.' "

Mr. Henson has known Ms. Gaddy since 1971. He said he met her when she approached the George L. Russell Jr. mayoral campaign for "walk-around" money for candidates she supported. Ms. Gaddy disputes his account, saying Mr. Henson offered her money to shut down the Russell headquarters on Election Day eve in anticipation of his loss.

Whatever happened in the past, Mr. Henson said, no one remain angry at Ms. Gaddy.

"And people love her, that's what knocks me out," he said. "I love her. [But] she's cagey. Mother Teresa never took walk-around money."

Mr. Adams described Ms. Gaddy as "hardheaded" and fiercely protective of Patterson Park, especially if she thinks someone is trying to usurp her power. "She feels threatened," he said of her clashes with city officials, which he also described as a "battle of egos."

"In 1989, she did take [the city's] money," Mr. Adams said, referring to grants made to the women's shelter. "But she was a lot a smaller then. She doesn't have to do that anymore."

Ms. Gaddy's supporters -- men and women from all walks of life -- rave about her dedication, her temperament and unflagging energy. Her lawyer, Russell Karpook, calls her a "a child of God."

Even the secretary of state's office, while expressing some concern when asked about the Patterson Park check used for Ms. Gaddy's City Council campaign, has been reluctant to chastise her because she is considered well-intentioned. However, its staff set up a meeting with Ms. Gaddy to review accounting procedures for nonprofits, said Alicia Moran, a spokeswoman for the office.

But individuals throughout Maryland's nonprofit sector expressed dismay at Ms. Gaddy's reputation, which many believe has been exaggerated. They are troubled by her lack of accountability and say she is only a small cog in Baltimore's huge social services machine.

Why does accountability matter? In the words of Daniel Langan, a spokesman for the National Charities Information Board in New York, "It's all a charity has."

Ms. Gaddy, who began restructuring her organization this spring, agrees: "In the end, no one will have ulcers wondering what Bea has done with the money. I've been open and I've been honest, and that's the way I have to be. . . . Everything is accounted for."

She speaks proudly of the changes she says are occurring, such as the creation of a board of directors and her improved accounting procedures. These changes began after The Sun and the state started asking questions.

But there also is evidence that Ms. Gaddy's methods have curtailed her ability to raise money. Mr. Henson said she cannot or will not apply for federal grants because she can't provide the necessary documention. Longtime adviser Bernard Potts said he knows some foundations have shied away from her for the same reason.

Ms. Gaddy's honors keep piling up: induction April 30 into the African American Biography Hall of Fame, President George Bush's 695th point of light, The Sun's Marylander of the Year, the 1993 Caring Award from the Washington-based Caring Institute's, Family Circle magazine Woman of the Year. Supporters still talk about nominating her for the Nobel Peace Prize. They are shopping her story around Hollywood for a possible television movie, which they hope will star Angela Bassett or Whoopi Goldberg.

As for every problem cited in this article, Ms. Gaddy either pleaded ignorance, pledged to change or blamed someone else. She means well, she said repeatedly. Why would anyone question her?

"You're going to be criticized," she said at one point. "They criticized God and they finally killed him. Not that I'm worth his toenails."

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