Nancy Reagan Drops Support for Proposed Drug Center

Nancy Reagan has formally withdrawn her support of a proposed Los Angeles drug treatment center to be operated by Phoenix House and asked that 200 donors who pledged $5 million to the project be given the opportunity to transfer their donations to her own Nancy Reagan Foundation, The Times has learned.

“This is a major disappointment to us,” said Chris Policano, spokesman for Phoenix House in New York, a private foundation that operates a variety of drug programs across the country. “There had been no prior dissension. It was a surprise; let me leave it at that. . . . But she has changed her mind. And that is her decision to make.”

Phoenix House, meanwhile, has sent letters notifying donors of Mrs. Reagan’s wishes but informing them that the foundation believes that it has a legal obligation to use the money for a drug treatment center somewhere in the Los Angeles area.

Scope of Program

However, Policano said, the scope of the program would undoubtedly be “narrowed” because of the organization’s loss of the Nancy Reagan name as a fund-raising asset.

Mrs. Reagan’s spokesman, Mark Weinberg, said in an interview Thursday that Mrs. Reagan believed that she was “spreading herself too thin” because she was doing so much work with her own foundation, her upcoming book and charitable work on behalf of cancer patients.

“She felt she couldn’t get the drug center done properly,” Weinberg said.

Asked what Mrs. Reagan believes should happen to the money raised for the center, he said: “Mrs. Reagan believes it is up to each donor to decide what should happen to their donations.”

However, the law may not allow contributors to re-channel their donations once given, according to an opinion Phoenix House requested of the California attorney general three weeks ago.

“Maybe some of those donors would have preferred to transfer to her (Nancy Reagan’s) organization,” said Carole Ritts Kornblum, the assistant attorney general who rendered the opinion, in an interview Thursday.

“But that’s all history. It doesn’t matter. . . . I don’t think there’s any legal obligation on the part of Phoenix House, which received gifts, to forward them to any other charity,” Kornblum said.

No Decision

Policano said that to date, only three contributors have asked that their donations, totaling $65,000, be returned or transferred. No decision had been made as yet as to what would happen with those donations, he said.

The former First Lady announced in May that she was withdrawing her support for the proposed site for the center in Lake View Terrace because of opposition from homeowners there. A source close to Mrs. Reagan said she told Phoenix House officials informally shortly after that discussion that she would be dropping her support of the project altogether.

However, Policano said a staff aide to Mrs. Reagan did not notify Phoenix House until Aug. 8 that she would no longer lend her name or fund-raising powers to the proposed treatment center and that she “was going to use the Nancy Reagan Foundation as the base of her post-White House efforts.”

As a result of the notification, he said, the board of directors drafted a letter that it sent to more than 200 donors who had contributed about $2.8 million in cash and made another $2.2 million in pledges to “clarify the situation.”

The letter informed donors that Mrs. Reagan’s change of heart “was a costly one.”

More than $600,000 had already been spent on the Lake View Terrace project. The funds were used to purchase an abandoned hospital that was to have been the site of the drug treatment facility and develop the program there, the letter said.

“Let me point out that the directors of Phoenix Houses of California were willing to make so large an investment . . . because of iron-clad assurances we had received from Mrs. Reagan, her advisers and aides,” said the letter, which was signed by Dr. Mitchell S. Rosenthal, president of Phoenix House Foundation Inc.

In a related development, The Times learned, the Nancy Reagan Foundation formally requested--and received--permission to withdraw another $3 million from a permanent endowment at the Community Foundation of Greater Washington Inc. to fight substance abuse. Mrs. Reagan had helped raise the funds during her years in the White House.

Funds for Campaign

Weinberg said Mrs. Reagan’s understanding was that those funds “were always for her to continue her anti-drug abuse campaign, and once the (Nancy Reagan) foundation was established, then the funds were made available so her work could continue.”

However, Dick Snowden, chairman of the board of the Washington foundation, said in an interview that the board was under no obligation to honor such a request. It agreed to do so after first ascertaining that the new Nancy Reagan Foundation would distribute the funds according to the wishes of the donors.

Snowden said the question of what would happen to the funds was “never spelled out” when it was set up in the early 1980s. The contract under which the fund was established called for it to be an ongoing endowment from which the foundation board would distribute funds with the advice of Mrs. Reagan, he said.

The Nancy Reagan Foundation requested return of the funds last spring.

“Our board wrestled with it, but it didn’t wrestle too hard,” Snowden said. “There was opposition in the sense that, frankly, our greatest concern was that during the time the fund had been here, not as much money had stayed here in Washington as we would have liked and we had expected.”

He said the board’s debate also centered on the fear that if the funds had not been released, then future first ladies or other officials might be hesitant to deposit funds there. He said no other such endowment has been transferred.

The Nancy Reagan Foundation is considering 40 requests for grants from drug prevention and education programs around Southern California. A celebrity tennis tournament is scheduled for Oct. 7 to raise more funds for the foundation.