Foundation says agreement is lopsided

Noaki Schwartz

NEWPORT BEACH -- Library foundation members are hammering out a

counterproposal to what they perceive to be a lopsided resolution to

their dispute with the library’s trustees.

For months, all five trustees and four key foundation members have been

meeting in an attempt to resolve the financial disagreement that first

came to public light last fall. In an Oct. 19 letter, the trustees

threatened to sever ties with the foundation unless it reduced its

operating costs, regularly sent out clear financial reports and gave the

trustees greater control of the foundation’s operations.

Here are a few of the key requirements of the proposed agreement:

* That the operating expenses of the foundation be below 30%.

* That the foundation be annually audited.

* That the money being raised for the $2.5-million endowment fund should

not be used to run the foundation.

* That a foundation member would attend trustee meetings and vice versa

in order for each to know precisely what the other is doing.

But the proposed agreement does not address some of the major underlying

disagreements between the two groups, such as what constitutes an

operating cost.For example, while the trustees said the foundation spent

more than 50% of the money it raised on operating costs, the foundation

insisted it was well below the accepted 15% level. One of the reasons for

the discrepancy is that the trustees consider the Manuscript series and

Distinguished Speaker series to be operating costs while the foundation

members do not.

The agreement was taken to the foundation for approval but was not

accepted by the rest of the 20-member board, as many were upset that it

appeared to choke the nonprofit organization.”It [does] seem like it

erodes the independence required of the foundation,” said president David

Carmichael, who was one of the four foundation members to initially sign

off on the agreement. “In order to maintain our tax status as a separate

legal entity, the directors need to keep their autonomy.”

The foundation will be meeting this week to discuss the proposal and

outline what they would like to see changed, and both groups plan to meet

at the end of the month.

Still, trustee chair Jim Wood maintains that the proposal is fair. It

might appear one-sided simply because the trustees are the ones who had

the problem with the foundation. He added that the agreement was written

by both groups and not just trustees.

“It seems like a fair document for two organizations that have a common

purpose -- namely the successful operation of the Newport Beach Public

Library -- to operate under,” Wood said.

In addition to adding measures aimed at increasing communication between

the two entities, the agreement outlines actions the foundation already

performs -- such as giving the trustees financial reports -- and spells

out the group’s role.

The proposed agreement is available for public view on the library’s Web

site, at o7 www.newport-beach.ca.usf7 .