Newport Council offers shelter to ousted foundation

Noaki Schwartz

NEWPORT BEACH -- The City Council has taken the disowned Library

Foundation under its wing and offered to find the group temporary space

somewhere in City Hall.

The action comes on the heels of a move by the Newport Beach Library

board of trustees to disband the fund-raising group and evict it from its

office in the Central Library. The trustees are disputing the

foundation’s fund-raising practices.

But council members urged the two groups to meet with a professionally

trained facilitator after heated emotions cool down.

While foundation chair Dave Carmichael eagerly embraced the idea,

frustrated trustee chairman Jim Wood said too much time had already been

spent on the issue.

“[The trustees’ responsibility] is to look after the good name of the

library,” Wood said, tapping the podium to underscore his words.

The City Council found itself in the uncomfortable position of getting

involved in the dispute after Councilwoman Norma Glover brought the

matter before the study session. She wanted city staff to outline the two

library bodies’ respective roles.

The council members were clearly disappointed with Wood’s decision to

reject professional mediation. And although Mayor John Noyes urged him to

bring the matter to a board vote, Wood stood his ground.

“What started as a tempest in a teapot is now a barroom brawl,” Wood

said.

The dispute over control over the foundation’s savings has been festering

for more than a year. While the foundation has attempted to build an

endowment fund to help the library weather bad financial times, the

trustees rejected the idea and wanted the $1.5 million for more immediate

uses.

Frustration on either side escalated to such an extent that the trustees

sent a letter to the foundation on Jan. 18 demanding that unless

foundation members signed a cooperating agreement, they would have to

move out of the library office and turn over the endowment fund. Wood

also wanted the nonprofit group to change its name.

While the trustees can demand the foundation leave the premises, City

Atty. Bob Burnham pointed out they cannot control the foundation and do

not have exclusive rights to the library’s name.

The foundation must remain legally independent of the trustees in order

to operate as a private nonprofit, Burnham said. Therefore, the trustees

cannot gain the financial control they seek.

In addition, the foundation has already decided that should it disband,

the money would go to the Orange County Community Foundation, which would

then turn the savings over to the library once an endowment fund was

created.

The relationship between the foundation and trustees is symbiotic. While

the foundation raises money for the library, the board decides how the

dollars are spent.

The foundation was formed in 1993 and has raised more than $2 million --

most of which is in the disputed endowment fund. And while Wood argues

that the foundation contributes only 2.7% to the library’s overall

budget, the money is used for the library’s most popular programs. They

include the Manuscript Series, Book Club, the Spring Series, the annual

Poetry Festival and other activities.

This year’s Distinguished Speaker Series -- another foundation event --

features such speakers as social activist Susan Faludi and TV journalist

Tom Brokaw.

The dispute came to light when the trustees sent a letter to the

foundation demanding that unless they gained more control and more

insight into the nonprofit’s financial activities, the relationship would

be severed.

The trustees demanded that the foundation reduce its operating costs,

provide clear financial reports and give them greater financial control

over the foundation’s money.

Despite optimistic efforts to resolve the problems through mediated

meetings with City Manager Homer Bludau, three months later, the

situation appears worse than ever.

Still, at the end of 1999, the two groups in good faith attempted to

draft a cooperating agreement outlining their respective roles.

However, when Carmichael took the document back to the rest of the

foundation members, they found it to be too lopsided.

The foundation in turn drafted a revision, which they presented to the

trustees, who then rejected it, leading to the fateful Jan. 18 letter

demanding that the foundation clear out of the library.