City OK with VCCF, Finance Official Says
The City of Thousand Oaks intends to keep in place the approximately $4.5 million it has invested with the Ventura County Community Foundation in spite of a recent scathing report by the California attorney general’s office that says past VCCF leadership badly mismanaged funds.
Thousand Oaks Finance Director John Adams told the Acorn this week the foundation is on the right path with CEO Vanessa Bechtel, the person who reported the organization’s shortcomings to the attorney general shortly after she was hired in 2015.
Founded in 1987, VCCF oversees $112 million in total assets in scholarship and grant funds that benefit students and nonprofits throughout the county, including the city’s two public theaters at Thousand Oaks Civic Arts Plaza.
“I have met with the CEO and CFO of VCCF several times over the past two years and they have kept us informed,” Adams said in an email. “They self identified some issues and, after the attorney general’s review, have developed a plan to address those past issues.”
Bechtel told the Acorn that the foundation will comply fully with the corrective actions outlined by the attorney general in its February report, including the paying back of $1.8 million to certain endowment funds by 2029. Neither of the city’s two funds held by VCCF were directly affected by mismanagement and therefore are not subject to payback, Adams said.
“This is a report that the attorney general’s office chose not to publish or make public—we chose to do that,” Bechtel said. “It’s very important for us . . . to make sure we are very open and transparent so we can best serve (our donors) and our community.”
The bulk of the issues highlighted in the Attorney General’s report are related to the foundation’s building on Mission Oaks Drive in Camarillo, purchased in 2012.
The report says VCCF leadership estimated they could raise $10 million in a capital campaign for the building; instead, they brought in less than $500,000.
As a result, VCCF used $3.8 million in endowment funds meant for operating costs to purchase the building and to renovate it, the report says. The amount represented around 83 percent of the foundation’s total endowment, leaving just 17 percent in investment pools.
“It was . . . imprudent for prior (VCCF) management and the board to purchase the building without sufficient funds to manage the associated debt,” the report says.
Making matters worse, the foundation leased space in the building to nonprofits at a discounted rate for a period of 15 years, which hurt the organization’s bottom line and made it impossible to sell the building without incurring a substantial loss, the report says.
Beyond purchasing a building it could not afford, VCCF had for years mishandled endowment funds by leaving the cash in low-yield money market accounts as opposed to investment pools, the attorney general’s investigation found.
The $1.8 million the foundation was ordered to repay represents the estimated damage to funds caused by the long-term money market allocations.
“Good faith is no defense in an action against directors who breach the prudent investor rule,” the report says.
Although former foundation CEO Hugh Ralston is gone and the foundation named a new board chair in January, the organization’s board remains the same.
“These nine people have stayed on the board to see this process through,” Bechtel said. “The board has been in lockstep with the attorney general and I think it’s important we were unanimous in the decision to self report.”
IN A NUTSHELL
All members of the Community Foundation board have been instructed by the attorney general to receive additional training on their fiduciary duties.
Since its fiscal mismanagement was uncovered by Vanessa Bechtel in 2015, the foundation has reduced its staff from 22 to five and refinanced its multimillion-dollar mortgage after the lender agreed to better loan terms. T.O. Finance Director John Adams is confident the foundation is in good hands with Bechtel.
“I believe the new CEO understands (the foundation’s) fiduciary responsibility and will guide the board accordingly,” Adams said. “They do have the leadership and board engagement to continue to be an asset for all of Ventura County.”
VCCF has already repaid $400,000 of the $1.8 million and retained an outside consultant to review its current investment policies to ensure similar financial mistakes don’t happen again.
Foundation board member Gary Erickson said, “Transparency is the only path to fully restoring the trust and confidence of our donors and the community we serve. . . . We regret the path that led to this situation and are taking aggressive steps to ensure it will never happen again.”
Bechtel believes the foundation has put a “difficult chapter” behind it.
“I am especially grateful to our donors and supporters for sticking with us through a challenging time. This reflects both our commitment to transparency as well as our 30-year track record of providing critical support to Ventura County residents,” Bechtel said.