Hundreds of Denver assets could be missing due to inaccurate books, audit finds

 

A new report from the Denver Auditor’s Office found that the Caring for Denver Foundation — a new pot of money collected through a sales tax to fund mental health programs — has millions of unused dollars and lacks direction and goals. 

Caring for Denver is a nonprofit founded by voters after passing a 0.25% sales tax increase in 2018 to raise $35 million annually for mental health and substance misuse services. At least 10% of what’s generated each year also funds alternatives to jail, including the city’s co-responder program, which pairs mental health professionals with police, and Denver’s Support Team Assisted Response, or STAR program, which sends some 911 calls to trained social workers instead of law enforcement officers.

As of May 31, Auditor Timothy M. O’Brien’s office found the foundation had collected nearly $41.5 million in unspent tax revenue and awarded just $2.5 million in grants, most of which went toward the Denver Police Department, which houses the co-responder and STAR programs. 

“Look at what the city is doing with $2 million, and then consider what community groups could be doing with the other millions in unawarded grant funds,” O’Brien said in a statement Thursday. “Caring for Denver needs a plan and better oversight from the city to get the money out the door, so organizations can try new initiatives and do more good work.”

Criminal justice experts tend to agree that the keys to solving crime are found in community. Denver’s deadly crime has soared in recent months, at a time when residents are gripped by the COVID-19 pandemic, record unemployment, unrest from racial injustice and more. 

“The city, Caring for Denver, and many other community-based groups are working hard to find solutions for people most in need by addressing addiction and mental health issues and keeping people out of jail,” O’Brien said. “Caring for Denver should be using its large fund balance to move these programs ahead, as the voters intended.”

Caring for Denver Executive Director Lorez Meinhold called the audit “misleading.” Using Caring For Denver’s fund balance on a single day in May as a metric for grant-making effectiveness fails to provide an accurate picture, she said. 

“We had just received our final, reconciled fund balance two months prior to the auditor’s preliminary findings and had already been in the process of funding dozens of programs,” Meinhold told Colorado Politics in an email. “Moving any more quickly would have meant spending funds we may not have had, violating our contract with the City and our requirement to the voters as cited in the ordinance. It would also have meant violating our own fiscal standards given we had just completed setting up our grantmaking infrastructure in the spring of 2020.”

O'Brien told Colorado Politics that Caring for Denver's response is "deflecting" the findings. 

Caring for Denver receives approximately $3 million per month from sales taxes, he said. "The point is that they are not getting the dollars into the programs the sales tax dollars are earmarked for. $41 million at May 31, 2020, represents almost 14 months of sales tax revenue."

As of the end of September, the organization has funded 60 proposals for more than $16.8 million and expects to award roughly $5 million more next month, “all to worthy Denver organizations and agencies — to improve the lives of thousands of Denver individuals and families,” she said. 

The Caring for Denver Foundation plans to grant the remaining balance of 2019 funds by the spring of next year, the same time the organization will receive reconciliation of 2020 tax revenues available. 

O’Brien’s audit also found that the foundation lacks a clear strategy, despite its development of a funding priorities report in January. The report, O’Brien said, missed clear goals, direction, performance indicators and timelines.

Caring for Denver officials said they recently approved a new strategic plan, however O’Brien said a future follow-up audit is needed to ensure the new plan addresses any shortcomings. He also said some of the issues raised by his office could be improved if Denver’s health department provided better oversight of the foundation.

“This is not the first time we have noted taxpayer funds accumulating in the bank accounts of city-affiliated nonprofits,” Auditor O’Brien said. “The city needs to ensure new nonprofits linked to voter-approved ballot measures are set up with clear direction.”

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