For the second time in a year, the Community Foundation of the National Capital Region is in the spotlight — but not for its philanthropy.
In September, the charitable-fund manager came under fire for its oversight of CharityWorks, a local organization that spent millions on lavish fundraising events but failed to deliver grants promised to local nonprofit groups. Now, a longtime foundation accountant is suing her former employer, claiming that she was fired after reporting misuse of donor funds, including the CharityWorks fund; violations of IRS guidelines; and forgery.
Adrienne Brown, who worked at the foundation for 12 years, says that she was terminated in March after voicing concerns about the improper use of donations — even though the foundation, according to the lawsuit, has a whistleblower policy that requires employees to comply with all applicable laws and regulations and “imposes an affirmative obligation on employees to report actual or suspected violations.”
Named as defendants in the lawsuit, filed in the District’s Superior Court in late May, are the foundation, president Bruce McNamer and board chairman Neal Simon. Simon declined to comment. In a statement, McNamer said that “this lawsuit is an effort to create smoke where there’s no fire. Most of the issues described happened a long time ago and are mostly minor recordkeeping processes framed and conflated to make it look like something nefarious was going on when it wasn’t.”
Brown, 42, began working at the foundation in 2005. “I definitely believed in community foundations when I started,” she said in an interview. “I used to tell people all the time that if I was offered a job paying more, I wouldn’t take it because I loved my job. But it’s very difficult when you feel you’re placed in an unethical environment or culture.”
The Community Foundation, part of a nationwide network, acts as a manager for charitable donors and makes grants to local charities based on the donors’ suggestions. It oversees more than 700 donor funds valued at more than $300 million, and gives away about $90 million each year, making it the largest single funder of nonprofit groups in the region.
Each fund is like a bank account: Donors get a tax deduction and choose which causes to support, and the foundation oversees all the research and paperwork for a small fee. Different funds operate under different rules, which can make oversight complicated.
One CFNCR fund was CharityWorks, which attracted some of the city’s most generous philanthropists. Although it acted like a typical nonprofit organization — soliciting donations, hosting fundraisers, distributing money — it was actually a “donor-advised fund” within the foundation. The CFNCR paid all the bills for CharityWorks’ extravagant events, which cost close to $1 million annually, and wrote checks to CharityWorks’ designated charities.
The foundation is not required to publicly disclose the expenses or grants of individual funds, and apart from foundation staff, only the fund adviser — CharityWorks founder Leah Gansler — had access to its financial records. Gansler has previously acknowledged that she controlled all the finances for CharityWorks.
“I authorized expenditures related to our events, and I led the fundraising efforts for our events as well,” she said, adding that “I do not have any concerns” about the lack of transparency.
In 2015, a number of CharityWorks beneficiaries began to complain to Gansler that they hadn’t received money they were promised. The foundation, Brown said in the interview, should have been aware that the designated charities were owed money and how much, but she said that no one at the foundation was keeping tabs on Gansler — and there wasn’t enough money in the fund to pay those grants.
When The Washington Post began investigating CharityWorks last year, McNamer said that the group’s annual fundraisers were “a legitimate deductible expense for charitable purposes,” and that he was comfortable with the $1 million costs because they were valid expenditures.
That should have been a red flag, says Brown, who did not work directly on the CharityWorks account. According to her complaint, paying expenses out of a donor-advised fund is a violation of IRS guidelines; she also alleges that the foundation directly reimbursed Gansler for those expenses, also contrary to IRS rules prohibiting fund advisers and related parties from benefiting from the fund.
The IRS declined to comment because it is prohibited by law from discussing specific entities or individuals.
CharityWorks stopped hosting its fundraising parties in 2016 but is still seeking direct donations. McNamer would not comment on specific allegations about the fund included in the lawsuit. “We’re working closely with the team at CharityWorks, which continues to raise funds to pay off their charitable commitments — all without big events,” he said. “And we’re continuing our investments in oversight and new technology to help our donors have an even greater impact with nonprofits in the Greater Washington region.”
The lawsuit also says the foundation misused donations from the District of Columbia and private donors, claiming that some of the money improperly went to the foundation’s negative operating budget, some to unauthorized investments, and some to fund advisers for salaries and operating expenses. Brown says that she brought these issues to McNamer, but nothing changed. After she reported that her supervisor had forged a $35,000 foundation grant check, she says, she was effectively demoted, excluded from office meetings and fired four months later.
She is asking for an unspecified amount in damages for wrongful termination and a jury trial.