Oversight of mental health foundation called into question
Western North Carolina’s mental health agency may be headed for a civil war with its partner foundation.
Smoky Mountain Center, a quasi-state body that oversees mental health in the region, hopes to wrest $20 million in assets away from its sister nonprofit, citing a lack of oversight for public funds.
For three decades, the Smoky Mountain Center has relied on its nonprofit foundation Evergreen to bolster mental health and substance abuse services in the region.
But the foundation has grown increasingly estranged from the agency it was intended to support, according to board members of Smoky Mountain Center.
“There has been a disconnect there,” said Ronnie Beale, a member of the Smoky Mountain Center board and Macon County commissioner.
Communication between the two entities is sparse to nonexistent. The center’s requests for financial assistance have repeatedly been turned down, and the foundation won’t even disclose how its funds are being spent, according to Brian Ingraham, the executive director of Smoky Mountain Center.
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“It is not supposed to be some organization off on their own with no public oversight,” Ingraham said.
Ingraham and his board of directors have proposed a major overhaul of the foundation to bring it under the auspices of Smoky Mountain Center.
“The bottom line is the board thought these funds should be under public scrutiny,” Beale said. “We feel it is public money, and it should be under public oversight.”
A letter was sent to foundation board members this week asking for a meeting within 30 days to discuss the issue.
Tom McDevitt, the executive director of the Evergreen Foundation, has little to say for now.
“Until whatever meeting takes place between Smoky Mountain and whoever, we are not going to be able to comment,” McDevitt said.
Until recently, the foundation and Smoky Mountain Center shared the same director — McDevitt. But McDevitt resigned from Smoky Mountain Center under pressure in fall 2008. McDevitt had come under scrutiny for using his position for personal financial gain.
He managed to hang on to his position as director of the Evergreen Foundation, however, which had a different slate of board members.
McDevitt disagrees with the line of argument Smoky Mountain Center is presenting.
“I don’t feel there is any disconnect whatsoever,” McDevitt said.
McDevitt said he has met with the board of Smoky Mountain Center whenever he’s been asked. But when Smoky Mountain Center needed an emergency meeting over state budget cuts, Ingraham said it took weeks to get it arranged.
State budget cuts axed $10 million over two years from indigent care — a fund that covers mental health and substance abuse treatment for those who can’t afford it. The 20 percent cut means poor people who need therapy or treatment won’t be able to get it now.
Smoky Mountain Center asked the foundation for a $2 million grant to make up some of the difference.
“Wouldn’t this seem like exactly why the foundation was developed?” Ingraham said.
But the foundation granted them only $200,000. Smoky Mountain Center also asked the foundation to forgive their rent for the year.
Smoky Mountain Center pays $280,000 a year in rent to the foundation for office space and a mental health and substance abuse clinic called The Balsam Center.
The two buildings were bought and paid for with state money given to Smoky Mountain Center but were then passed along to the foundation, which manages the properties.
The foundation owns the buildings as a result. Ingraham said it is wrong that the foundation won’t cut Smoky Mountain Center a break on rent when they paid for the buildings in the first place, Ingraham said.
“We gave them the money, but now they say ‘We aren’t going to help you,’” Ingraham said. “That was the point where people realized there was nothing appropriate or correct about this any longer.”
But McDevitt said the foundation’s purpose is about more than helping Smoky Mountain Center. Its mission is to support people with mental health, substance abuse and developmental disabilities throughout the seven counties.
“That is the sole purpose of the Evergreen Foundation,” McDevitt said. “We have done a very good job of that over 33 years.”
That mission, he said, can include making grants to private practices that offer counseling and mental health treatment other than Smoky Mountain Center. McDevitt said that the foundation has given out $200,000 in grants to private mental health practices this fiscal year.
Ingraham said he has asked McDevitt to share what grants have been given out and how the foundation is spending money.
“We have asked for that information, and it has not been forthcoming,” Ingraham said.
McDevitt disagreed.
“They did know about them. Of course they knew about them,” McDevitt said of the other grants.
How it all started
When Evergreen Foundation was created in the late 1970s, it was out of necessity. State agencies couldn’t buy and resell property, and Smoky Mountain Center needed to amass an inventory of office buildings for mental health and substance abuse counselors to work out of throughout the seven western counties.
But the law has since changed, and state agencies can now act as their own property management arm.
While the foundation has always had its own board of directors, it was historically tightly controlled by Smoky Mountain Center. Early on, the Smoky Mountain Center appointed the foundation board, and many of the members sat on both boards.
But in 2001, when the state launched mental health reform, everything was on the table from privatizing mental health services to consolidating the regional agencies like Smoky Mountain Center.
In the ensuing turmoil, Smoky Mountain Center feared the state would attempt a money grab to seize the assets of the foundation. So it purposely built a firewall around the foundation. Bylaws were rewritten to make it a private entity, separate from Smoky Mountain Center.
“It was done to protect the assets for their intended purposes,” said Shelly Foreman, community director for Smoky Mountain Center.
At the time, no one envisioned that the foundation would one day end up with a completely separate director and board that had little interaction with Smoky Mountain Center, Foreman said.
“It was never the intention that Evergreen be disconnected from what the service needs and funding needs are in the community,” Foreman said.
Ingraham and his board hired an auditor to track all the money that had gone into the foundation since its creation in 1977. They determined $14.5 million in county and state tax dollars have flowed into the foundation’s coffers.
Nearly all of the money was for purchasing buildings in the seven western counties — from office space for mental health counselors to substance abuse clinics to the central headquarters for Smoky Mountain Center.
Smoky Mountain Center once operated its own teams of mental health counselors, therapists and psychologists throughout the region, housed in the office space owned by Evergreen but paid for initially with state funds.
The state has since privatized mental health, so most of that office space is now rented to private mental health practices — or in some cases to whoever is willing to rent the building whether the tennant was in the mental health field or not. The foundation keeps all the rent money.
Ingraham said the foundation is operating more like a property management and investment company than a nonprofit with a mission to fulfill.
“It is income that was generated from public money,” Ingraham said.
But McDevitt said the origin of the money isn’t relevant. It started out as public money, but was given to a private organization to carry out its mission.
“Where it goes to, it loses its identity as public funds,” McDevitt said.
The upshot
Smoky Mountain Center wants a new governing structure for the foundation. The proposal calls for the current foundation board to be dissolved. A new foundation would then be created under a new set of bylaws — stipulating that Smoky Mountain Center gets to appoint the board and hold a majority of the seats.
While the board of Smoky Mountain Center is a public body — meaning their meetings, financial records and actions are open to the public — the foundation meets in private and has no obligation to share its financial information other than its annual nonprofit tax filing.
The aim is to restore public oversight, Beale said.
The 30-member board of the Smoky Mountain Center voted unanimously for the proposal earlier this month.
To back-up the proposal, county commissioners from the seven western counties have been asked to pass similar resolutions over the next two weeks. Macon County commissioners were the first to do so this week.
Macon County’s resolution says if diplomatic efforts fail, legal routes may be necessary.
John Bouknight of Highlands, the president of the Evergreen Foundation board, would not comment in detail until after meeting with the Smoky Mountain Center board.
He said Evergreen’s mission goes far beyond just supporting the needs identified by Smoky Mountain Center.
“They aren’t everything,” Bouknight said. “I think we are following our mission statement. These are all very dedicated people.”
The foundation board only meets four times a year. Beale said he trusts that their primary interest is serving mental health and substance abuse needs, but he isn’t sure how informed they are.
“The only thing they know is what their director tells them,” Beale said. “I do have a lot of respect for some members on that board, and I think their heart is in the right place and will do the right thing.”
In the meantime, Smoky Mountain Center has alerted the state attorney general’s office of the unusual situation.
“We are talking about state funds that now exist within an organization that has no affiliation within Smoky Mountain Center and chooses to do whatever they want with it,” Ingraham said.
