National Diabetes Charity Settles Legal Dispute With Affiliate

The American Diabetes Association and its former Rhode Island affiliate have settled a legal dispute that erupted when the affiliate decided to break off from the national association rather than give up its autonomy. The two sides subsequently filed legal actions against each other.

Under the agreement, the former affiliate will keep its list of local donors and its fund balance, which amounts to about $325,000, according to Jeffrey H. Gladstone, who is past chairman of the former affiliate, which now operates independently as the Diabetes Foundation of Rhode Island.

But the former affiliate must pay the national association 35 per cent of money it raised through June 30, 1998, under a contract with the national charity. A magistrate judge issued an advisory opinion to a federal district court saying that the affiliate broke the contract when it left the national association but that the national association didn’t have a right to all of the affiliate’s assets. Both sides appealed the magistrate’s ruling but then decided to strike an agreement before the issue went to court, Mr. Gladstone said.

The dispute dates back to June 1997, when the national association’s board voted to abandon its structure of 51 independent affiliates coordinated by a national office and replace it with a single non-profit organization.

The Rhode Island affiliate argued that the association’s plan would jeopardize its own popular programs in the state, divert assets to weaker affiliates in New England, and lead to a loss of volunteer control of the affiliate.

John H. Graham IV, the association’s chief executive, said the national charity is “firmly committed to providing our services to people with diabetes, and we are going to be moving forward” in Rhode Island. The national charity has already opened a new office there.

Another former affiliate, in Mississippi, also broke off from the association because of the reorganization.