County Halts Costly Fund-Raising Effort : Government: $726,000 in public money spent in fruitless attempt to solicit cash for health agency.

Los Angeles County Supervisors voted Tuesday to halt a fund-raising effort by county employees who organized a nonprofit corporation and spent $726,000 of public money in a fruitless effort to raise cash for the Department of Health Services.

County health officials had created the nonprofit group--the Foundation for Health Services--in an attempt to tap into private philanthropic circles. The officials hoped to raise funds for hospital construction and other public health needs.

Three top administrators of the county health department functioned as the nonprofit group’s officers and six county health workers constituted its paid staff, officials said. They added that none of the health workers had previous professional fund-raising experience.

In 1989, the Board of Supervisors voted to allocate $800,000 over three years to cover the foundation’s start-up costs. But health department officials said Tuesday that effort had failed.

Supervisor Gloria Molina called the ill-fated fund-raising effort a waste of public funds. “The intent was a good one,” she said. “But these folks were bad at it. You don’t put people who are not prepared to be fund-raisers to work at this. I don’t know how this got so out of hand.”

Molina said an anonymous whistle-blower had brought the foundation to her attention, leading her to ask health department Director Robert C. Gates for a report.

Gates said Tuesday that the foundation had organized only one fund-raising event--a gala last October at the Universal City Hilton honoring Peter Samuelson of Starlight Foundation International, which assists critically and terminally ill children.

Organizing the gala cost $149,052, but raised only $132,412--a net loss of $16,640. Over the three years of its existence, the Foundation for Health Services spent $726,019 of county funds but has raised no money for department programs.

Another gala fund raiser was planned for this year but will likely be canceled, health officials said.

Most of the foundation’s funding was spent paying the salaries and benefits of the county employees who made up its staff, officials said. The employees worked to obtain the foundation’s nonprofit status and to build contacts in the philanthropic community.

“We had high hopes for (the foundation), but through a variety of circumstances, we have been unable to bring in the dollars,” said Carl A. Williams, the county’s director of hospitals who also doubles as the chairman of the foundation.

Other foundation officers are also high-ranking department officials. The treasurer is Irving Cohen, the health department’s assistant director for administration and finance. Dr. C.A. Evans Jr., assistant director for public health programs and services, is the foundation’s secretary.

Williams blamed the foundation’s difficulties on the recession, which has dried up many funding sources. “Unfortunately, we’re at the point where we’ve spent a considerable amount of money but didn’t get any back,” he said.

In a memorandum, Gates told the Board of Supervisors that the financially strapped health department could no longer afford to support the foundation if it continued to lose money.

The board instructed Gates to give the foundation a 120-day notice that its contract with the county was being terminated. The long notice is required under the terms of the contract.