Boosters May Not Give City Image It Seeks

Two years ago, when Garden Grove formed its own nonprofit foundation to improve the city’s image, it made the same move other cities with failed foundations made: staffing it with city officials and soliciting money from businesses with city-approved contracts.

The Garden Grove Foundation’s 13-member board includes the mayor, city manager, deputy city manager and a councilman, and the nonprofit is staffed with a single city employee. It has received $177,000 of the $313,000 it raised through June from 17 companies with city contracts. The board also includes two executives from companies with city contracts that together gave $70,000 to the foundation.

“That’s a sure recipe for failure,” said Jack Shakely, president of the privately run California Community Foundation. “The potential conflict of interest from the politicians and city officials is obvious and profound.”

Shakely, who has run the California Foundation in Los Angeles since 1980, and Ann Lee, an executive with the Orange County Community Foundation, which is also privately run, said other cities--including Brea--had community foundations that failed because of their close ties to its city councils.

The 10-year-old Brea Foundation was dissolved in 1995. Mayor Bev Perry said it was doomed by its ties to the City Council.

“The board was appointed by the City Council. This hampered us in getting funding,” Perry said. “A lot of entities didn’t want anything to do with us because of the perceived government ties and influence.”

Brea officials said the Brea Foundation was unable to raise any funds in its final three years, and was supported by a $45,000 contribution by the council over that period.

Garden Grove City Manager George Tindall brushed off criticism of how the city’s foundation is staffed and run:

“This is something good for the city. I’m not going to allow the critics to derail the foundation that is doing a good job of promoting the city and improving the lives of its residents.”

Kathy Moore, the Garden Grove employee who oversees the foundation’s day-to-day activities, said the group raises money from individuals, companies in the city and companies that do work for the city.

“We send out thousands of letters to companies and individuals soliciting funds,” Moore said. “Our problem is the city’s image as a run-down area. That’s not the case anymore. We’re using the foundation to enhance the quality of life in our community and promote it regionally.”

Most of the foundation-sponsored events scheduled between May and December are park concerts or a speaker series. But while most community foundations have advisory groups that help decide how funds are spent, the Garden Grove Foundation’s board makes all spending decisions.

“You can imagine how attractive this would be to a potential donor,” Shakely said. “This is mixing oil and water. Philanthropy is a private-sector responsibility. Garden Grove, a government, is telling donors, ‘Give me your money, and we’ll decide how to spend it.’ ”

Officials at the Claremont and Anaheim community foundations agreed that local nonprofit groups are better off cutting ties to city governments.

Beverly Speak, executive director of the Claremont Foundation, said it took the group nine years to wean itself from the city. The foundation has a 30-member board and two part-time staffers who are paid by the Claremont Foundation.

“We were started by the City Council and until last year had the city manager and a council member on the board,” Speak said. “We had donors who questioned their role on the board.”

Speak said that the Claremont Foundation, which has $400,000 in assets, solicits donations from businesses but does not target companies with city contracts.

“We don’t want donors to feel that because they are beholden to the city they have to support the foundation,” she said. “We don’t want people to confuse us with the city.”

Anaheim Community Foundation director Chris Jarvey credits the 16-year-old nonprofit group’s success to its independence from the city despite having “a symbiotic relationship” with it.

Jarvey said the Anaheim Foundation’s operating budget this year is about $300,000. In addition to financing community events, it helps the poor with their utility bills at Christmas and since 1990 has painted or repaired more than 350 homes owned by elderly or disabled residents at a cost of more than $2 million.

“A big reason for our success has been the board’s intent to keep the foundation as apolitical as possible,” Jarvey said. “You can only do this if you keep politicians off the board.”

Moore acknowledged that having two politicians and the city and deputy city managers on the Garden Grove Foundation’s board give the appearance of a conflict of interest. But she said the city’s long-term goal “is to have the foundation be self-supporting without the city’s participation.”

“We recognize that having them [city officials] on the board is not the best configuration, but it’s the best one working at the moment,” Moore said. “We agree that having a board weaned from the city is the best way to go. We’re in sync with what others say.”

Tindall, the city manager, also defended the Garden Grove Foundation’s practice of asking companies with city contracts for contributions. He said these and other businesses “are invited to financially participate in the foundation’s efforts.”

One corporate contributor is Garden Grove Disposal, which has a waste-removal contract with the city through 2014. The company signed a renegotiated agreement in November that included a new provision that it contribute $20,000 annually to the foundation and an additional $20,000 to the city for “community use” until the contract expires.

Tindall said the annual contributions called for in the new agreement are not a quid pro quo.

Garden Grove Disposal general manager Dave Ault said the company agreed to the donations “because we want to give back to the community.” He is also a Garden Grove Foundation board member.

Ault said the company’s parent corporation recently signed a new contract with Fullerton and also agreed to contribute $20,000 annually to help pay for the city’s community services.

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Garden Grove Foundation

The following companies that have contracts with the city of Garden Grove also donated to its nonprofit foundation.

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1. Time Warner Communications $40,000 2. Republic Industries 30,000 3. Pepsi Bottling Co. 25,000 4. Pacific Bell 17,500 5. American Medical Response 15,000 8. Pacific Development 10,000 3. Southern California Edison 10,000 6. Bixby & Olson Development 5,000 9. Centex Development 5,000 10. Donovan Golf Courses Management, Inc. 5,000 11. Stradling, Yocca, Carlson & Rauth 5,000 12. McWhinney Enterprises 2,500 13. Schuler Engineering 2,500 14. Stonebridge Cos. 2,500 15. Woodruff, Spradlin & Smart 2,000 16. Diehl, Evans & Co. 250 Total $177,250

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Source: City of Garden Grove