Pubdate: Wed, 03 Sep 2003 Source: News & Observer (NC) Copyright: 2003 The News and Observer Publishing Company Contact: http://www.news-observer.com/ Details: http://www.mapinc.org/media/304 Author: Dan Kane OVERSIGHT OF GRANTS EXAMINED For a decade, the John A. Hyman Memorial Youth Foundation has helped people quit drinking, steered children away from drugs, and handed out tens of thousands of dollars to youth programs. Frank Ballance, a former state senator elected to Congress last year, is the foundation's patron saint. Year after year, the Warrenton Democrat secured from $100,000 to $312,000 in state money for the program that served his district north of the Triangle. But Ballance didn't publicly disclose that some of the foundation's money went to the day care that his mother operates, to campaign staffers, and to nonprofit agencies run by campaign contributors. Some state lawmakers say the foundation's finances have opened their eyes to the need for more accountability from nonprofit groups that get state money. The legislature sends about $760 million a year -- nearly 5 percent of the state budget -- to dozens of such groups. "We're going to have to take long and close looks at programs like this that are not run directly by the state," said Rep. Joe Kiser, a Lincoln County Republican who oversees spending on justice and public safety programs. "We have got to have better accountability than we had on this case." New information about the Hyman Foundation is coming out in federal tax returns, which the foundation first began filing in July. It was violating federal laws that require all nonprofit groups that gross $25,000 or more a year to file annual returns with the IRS. The foundation also failed to provide annual audited statements to the state Department of Correction, as legislators required. In January, the Correction Department cut off state money. When legislators learned about the lack of accountability three months later, they dropped the foundation from the budget. They also called for a state audit, which is due out soon. Ballance, who served for 18 years in the General Assembly and who is chairman of the foundation's board of directors, declined to be interviewed for this article. In earlier interviews, Ballance has said the foundation's lack of financial accountability stemmed from miscommunication within the organization and a lack of expertise about what needed to be reported. In a statement last week, Ballance said the foundation is moving quickly to comply with financial reporting requirements. "I continue to support the foundation's work of addressing issues of substance abuse prevention and treatment in communities of need," he said. Fighting drug abuse The foundation is based at Greenwood Baptist Church in Warrenton. Two nights a week in the church basement, it operates a state-certified counseling program for people with drug and alcohol problems. About a dozen people showed up Thursday. The foundation runs a second program in Halifax County that transports people struggling with drug and alcohol addictions so they can get medical treatment and counseling. It also runs a support group for their children. Nicholas Powell, 20, a junior at N.C. A&T State University in Greensboro, said the support he received as his mother battled alcoholism made the difference in his going to college. He spent most of his childhood in a foster home, and the foundation served as a surrogate family. It helped him visit his mother and understand her cravings for alcohol, prepared him for the SAT and sponsored recreational activities such as baseball and bowling. "The John Hyman Foundation gave me a reason to believe I could be someone," Powell said. In addition, the foundation has doled out small grants to schools, churches, child-care centers and other nonprofit groups. But it has not required those groups to provide detailed written reports on how they spent the money. The foundation is just now catching up on its federal tax returns, showing how much it received and from where -- and how much it spent and how. Under scrutiny from the media and the John Locke Foundation, a Raleigh think tank, it so far has filed returns for 1994, 1995, 1996 and 1997. Though the foundation was created in 1985, it was dormant until 1993. Since then, it has received about $2 million, state records show. Eddie Lawrence, pastor of Greenwood Baptist, has been the foundation's director for three years, making about $30,000 a year. But when the foundation's financial problems became public in April, Lawrence lost his $66,351 state job as director of the Human Relations Commission. He had not disclosed his paid foundation work to the state, as required. In June, the foundation took another blow when officials with the state Administrative Office of the Courts decided it did not provide the level of services needed for drug defendants. That ruling shut down Warren County's drug court and cost the foundation several clients. Where money goes The foundation's reports to the state and the IRS have raised further questions. The foundation's conflict-of-interest policy bans board members from benefiting personally from its activities. But tax returns show that the foundation gave $3,000 in 1995 and $4,250 in 1997 to a nonprofit day care in Windsor owned by Ballance's mother, Alice. The Kiddie World Child Development Center is in a building owned by Frank Ballance and his wife. Alice Ballance said the grants helped pay for a drug prevention program for 12-year-olds. "We asked them to give us a small grant, and they did," she said. Sears Bugg, a recent past president of the Warren County Republican Party, calls the foundation a case of political spoils. "I think there's some violations of campaign laws, and ethically it doesn't look like appropriate behavior," he said. He said he saw little proof the foundation had done much for communities it was designed to serve. A major recipient of Hyman foundation money is Nebo Baptist Church in Murfreesboro. The tax returns show that the church received $8,500 in 1995 and $53,000 in 1996. Nebo's pastor, Robert Holloman, a Democrat, was elected last year to succeed Ballance in the state Senate, and his wife, Velma, served on the foundation's Board of Directors until recently. Both have donated to Ballance's political campaigns. Holloman said the money has gone toward his church's Reaching Out Against Drugs program, which includes a Friday night counseling session for as many as a dozen people suffering from alcohol and drug addictions. The church also has received money to provide counseling and tutoring for pregnant teenagers. He calls the criticism of the foundation "a big political stink" raised by Republicans looking to wound Ballance. "The bottom line from what I've seen of the Hyman Foundation is they are about helping people and making a difference in the community," Holloman said. Two people who helped Ballance get elected over the years are also paid foundation staffers. Melinda Solomon-Harris, who is paid $24,200 a year to run the Halifax County program, has served as Ballance's campaign chairwoman for his legislative races. She also works full time as an assistant principal for Weldon High School in Halifax County. Joyce L. Bullock is paid $14,400 a year as an administrative assistant for the foundation. She was Ballance's legislative aide in the General Assembly and treasurer for Ballance's state Senate and congressional campaigns. Bullock and Solomon-Harris said that they saw no conflict in their dual roles. Legislators say the Hyman episode shows that they have too little information on nonprofits that get state money to provide a wide range of services, such as arts programs and halfway houses for inmates. Some nonprofits are good at providing detailed financial statements; others are not. Kiser said legislators should disclose their financial relationships with nonprofit groups that seek state money. Rep. Phil Haire, a Jackson County Democrat who also oversees those programs, said nonprofit agencies should provide federal tax returns to legislators. Both predicted the reins will be tightened during the next legislative session, which starts in May. - --- MAP posted-by: Josh