February 7, 2002 | Read Time: 3 minutes
Allegations of mismanagement at the nation’s fourth-largest United Way — including claims of cronyism in a contract for an outgoing executive and improper spending to renovate the chief executive’s office — have led the board of the United Way of the National Capital Area, in Washington, to tighten controls over spending.
The board has established stricter rules on putting contracts out to bid, required approval of the full board for contracts with former employees, and barred the selling of United Way assets to former employees. It also voted for a second time to hire accountants independent of its usual auditors to investigate the allegations.
The board had approved the hiring of independent auditors at a meeting in October, but the charity’s lawyer decided that the outside accountants who already audit the United Way’s books met the board’s definition of “independent” and asked them to conduct the investigation. Now the charity is hiring separate auditors to do the work.
The controversy was spurred by a memo written by a United Way director in July. The director, Ross W. Dembling, is a Washington lawyer who has since left the board. Mr. Dembling’s memo cited allegations by some United Way staff members that part of an $85,000 allocation intended to renovate restrooms to make them more accessible to disabled people had instead been spent on refurbishing executive offices.
The memo also raised questions about a 12-month consulting contract given to the outgoing executive vice president, Oral Suer, in January 2001. The contract, under which Mr. Suer received $6,000 a month, along with up to $5,000 in monthly expenses, was approved by a board committee, but some trustees said they were unaware of it and thought it was too generous. The employees cited by Mr. Dembling also alleged that the charity’s chief executive, Norman O. Taylor, used United Way funds to pay for trips that they say had little relationship to agency business.
The board’s president denied the allegations. “There was no misappropriation or misuse of funds at all,” said Gwendolyn Boyd, speaking for the charity and Mr. Taylor. Ms. Boyd said all of the spending items in question were presented to the board. She attributed the confusion to board members’ failure to ask questions when the items were originally presented at meetings.
For example, she said, board members were told the $85,000 for building renovations was for a variety of purposes including improving access for disabled people. The money was also used to renovate Mr. Taylor’s office, carving out of it a new conference room and offices for the United Way’s chief financial officer and director of planned giving, she said.
But Donna Kloch, the board’s senior vice president, said the United Way should have been more aggressive in investigating the charges contained in Mr. Dembling’s memo. Ms. Kloch said the board had made it clear last fall that it wanted an outside accounting of the agency’s spending.
Mr. Dembling did not return calls seeking comment. Several current board members declined to comment, saying they preferred to wait for a report from the auditors who will be hired to investigate the charges.
