September 4, 2008 Issue
Chestnut Hill Local
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CHCA board hears report on Community Fund
In the wake of a state probe into the fiscal practices of the Chestnut Hill Community Fund and the Chestnut Hill Community Association, CHCF president Jean Hemphill last week made a presentation to update the association’s board on the fund’s activities.
Speaking at the Aug. 28 CHCA board meeting, Hemphill said it was essential to give the fund’s trustees sole authority over the disbursement of grant money.
Under Hemphill’s new policy, only the fund’s five trustees can endorse grant checks, and recipients must complete an accountability report at the end of the fiscal year in which the money was received.
The other fiscal controls include creating separate bank accounts for operations, real estate dealings and the annual fund drive; limiting CHCA recommendations for grant payouts to the board of directors, and making sure that the fund trustees have their “arms around the fund operations and assets.”
“There wasn’t good accounting discipline,” Hemphill said of the fund’s lending $50,000 to the CHCA and opening up a $130,000 line of credit for the association following the sale of 8431 Germantown Ave. to Bowman Properties. “And it wasn’t done in the way I would do it. But was it improper?
“When we investigated it, we concluded that the CHCA, during those years, used the money for charitable purposes, and they did it in an undisciplined, unbudgeted way, and that’s what led to the shortfalls and that’s where that money went.”
Hemphill did not detail how the $130,000 was spent, but she sought to reassure the board that the fund was in control of its finances and that the state attorney general’s audit would put an end to allegations of financial mismanagement. She said the trustees were confident that good governance would guide the fund in the future.
Still, some former and current board members were not satisfied with Hemphill’s presentation.
Former board member Jim Foster wanted Hemphill to explain how the fund justified forgiving the loans to the CHCA given the lack of documentation.
“An improper audit kept that off the book,” he said, “and if it had been on the books, the fund would be stronger by $180,000, and the CHCA would have debt. Now, the trustees can forgive that if they choose to — and that’s probably within their rights — but that should be in the daylight if they’re gonna forgive it.”
Foster said there was no evidence that fund trustees had met to authorize the loans for CHCA purposes, but Hemphill said she had found evidence of discussions about the loan and line of credit between the CHCA and CHCF.
Hemphill concluded: “It seems like it was fully known by the CHCA and the CHCF at the time the loans were being paid.” She then gave a hypothetical explanation of the CHCA’s shortfalls.
If CHCA were to budget $25,000 for the Pastorius Park concert series and weather conditions stifled the association’s ability to bring in the anticipated revenues, then, she said, a financial loss would be reasonably expected.
Board member Ron Recko took issue with Hemphill’s decision not to further investigate a $3,250 commission paid in 2006 to Legacy Real Estate following the sale of the 8431 Germantown Ave. property. He said the commission was paid within three days of Legacy president Sanjiv Jain’s request even though the fund’s trustees never approved the transaction.
Jain has said that commission was given to a Legacy employee who worked as a leasing agent for the transaction.
Recko believes that Legacy should return the commission. He said that Jain’s dealings should be reconsidered in light of the zoning variances Jain is seeking from the board for the Treehouse Play Café.
A draft copy of the fund’s finances was given to board members for review, but Hemphill said that audited statements would not be available until October.Hemphill also said the CHCA needs to work harder to raise money for its community programs, and that the fund should not have to bail out the CHCA when it is in the red. She also suggested that the CHCA should cut administrative costs to free up money.