The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. So when a board member, and even when the board chair decides to act independently of the rest of the board, it is my opinion that the board should collectively take action and either challenge that chair or even, should the independent action be grievous enough, remove the chair. I'm not sure what precisely the board of directors of the Mayor's Fund for Philadelphia will do about it's board chair approving an expenditure far outside the board's specific policy, but stay tuned. Here's the details from the Philadelphia Inquirer.
Mayor's Fund board kept in dark about spending
Updated: AUGUST 22, 2016 — 1:08 AM EDT
In April 2015, the board of directors of the Mayor's Fund for Philadelphia turned down a $25,000 grant request to market the city to the World Heritage City selection committee.
"The designation of Philadelphia as a World Heritage City is not a high priority from the board's perspective," the minutes of the meeting stated.
Two months later, without board approval or apparent knowledge, the Mayor's Fund came up with $10,000 for the effort, a pet project of Michael Nutter's when Nutter was mayor.
The grant apparently was approved by the fund's chairwoman, Desiree Peterkin Bell, who was also city representative and a member of Nutter's inner circle.
"I don't see anything that brought it back to us after we declined it," Andrew Frishkoff, one of the fund's board members, said after reviewing minutes and his own notes from the meetings last year.
The $10,000 grant is one of dozens of expenditures made by the Mayor's Fund without board approval.
City Controller Alan Butkovitz reported Tuesday that nearly $593,000 was spent from a Mayor's Fund account that had little to no oversight from the board of directors. He said that more than half those expenditures had been approved solely by Peterkin Bell.
Peterkin Bell's lawyer, Joe H. Tucker, said Friday that Peterkin Bell "never did anything that was inconsistent with the mayor's goals and that were not signed off on."
The Mayor's Fund for Philadelphia is a nonprofit run by city officials that manages $7 million to $10 million each year to promote tourism, business and economic development, education, culture, and job growth.
Much of its revenue comes from the city-controlled annual marathon. From that money, $500,000 was set aside in 2014 for grants, $200,000 of which was placed in a Marathon Reserve account, Butkovitz said.
Butkovitz said Peterkin Bell was using the marathon reserves money as a "slush fund." Money spent went to unapproved grants, a trip to Rome by Mayor Nutter and his staff to bring the pope to Philadelphia, an open-bar reception for the NAACP convention here , and Nutter's farewell celebration at University of the Arts. There was also more than $100,000 in credit card statements with no supporting invoices or explanations.
Nutter and Peterkin Bell have denied that the marathon reserve fund was used inappropriately. They said the fund's executive director, Ashley Del Bianco, approved all expenses.
Del Bianco said last week that although she did sign off on the expenses, she was concerned that the full board of directors had not been consulted. In January she asked the controller's office to review the fund.
"There were two different set of procedures and I wanted to align them," Del Bianco said. "The reserve fund was just under the discretion of one person, and that's just not good practice."
Del Bianco's predecessor, Maari Porter, said that the reserve fund had existed for a "long time" and that it is marathon profit set aside for the discretionary use of the City Representative's Office.
Several board members interviewed after Butkovitz's report expressed surprise and disappointment that they were kept in the dark about the Marathon Reserve Account.
"The frustrating piece for us is we weren't privy to this information," Frishkoff said. "We were brought on to try to professionalize this nonprofit."
Suzanne Beimiller, who served on the board from 2010 to 2014, said that record keeping was in disarray when she was appointed. She worked with fellow board members to get things in order. The board amended its bylaws in 2013 with strict rules on approval of spending.
For example, anything above $5,000 required signatures of two fund officers. If an action that normally required board approval was to be approved outside a meeting, all board directors had to agree. Each grant applicant had to have a deputy mayor or city department sponsor its application.
"I was really happy," Beimiller said. "The board had processes and procedures for marathon grants and made sure grants would meet the mayor's goals."
According to meeting minutes, board members made careful decisions about how to spend their small pool of grant money. Many seemingly worthy programs were denied funding because the organization had already received money the previous year, or because its goals did not match the fund's, or because its application was unclear on goals and projected outcomes.
Those that were approved often received a fraction of what had been requested.
"They highly scrutinized everything while I was on the board," according to a board member who requested anonymity. "There was a lot of speculation and distrust, uncertainty from the board because of the past."
David Thornburgh, president of the civic watchdog group Committee of Seventy, said the Mayor's Fund for Philadelphia had been a "political volleyball" for as long as he could remember.
"It's supposed to be a more flexible way of spending money," Thornburgh said, "but that leaves it vulnerable."
Thornburgh said he could see justification for Butkovitz's questions. But he said proper controls should be in place to keep track of expenses.
"Is it sloppiness or willful deceit? Who knows," he said.