Kudos to the Voice of San Diego for its investigating the "fishy smelling" arrangements managed by New Alternatives. New Alternatives is a nonprofit that is intended to serve foster kids in the San Diego and Orange Counties. New Alternatives has a "sister" organization in Montana (anyone's guess) that serves essentially as an operating foundation. New Alternatives appears to be taking some of its unexpended funds and putting these in its sister organization. Fishy smelling yes although not because building an endowment is a bad idea. Endowments are really good ideas for weathering bad or slow income times.
But wait, there's more. The ED serves both organizations and receives pay from both. And the board, well that's a whole other kettle of fish (get the theme?). The board are all good friends of the ED which isn't unusual but it's unclear about the "why" they are on the board - that is, what value they bring given their apparent disconnect to foster care. Even the few words from the treasurer reinforce something amiss.
Well, this is good and deeply disconcerting reading. I trust this will move the California and Montana AG's to have some conversations.
A San Diego Foster Care Charity Is Funneling Millions Into a Foundation to Pay Its CEO
Next to the Clark Fork River in Missoula, Montana, sits an office building where a multi-million-dollar foster care charity called MAC Foundation lists its address — only there are no traces of MAC to be seen.
MAC was created by New Alternatives, a San Diego foster care charity that receives a large majority of its funding from taxpayers. Since 2015, New Alternatives has pumped millions of dollars into MAC. The money, for the most part, just sits there. MAC had $20.6 million in 2022, according to tax returns reviewed by Voice of San Diego.
Aside from funding one study, the only thing MAC has ever done is pay New Alternatives’ CEO Michael Bruich. Bruich is listed as MAC’s CFO. The money he gets from MAC is on top of his regular, New Alternatives’ salary.
Federal, state and local governments send tens of millions of dollars a year to New Alternatives, so it can provide care for some of the region’s most vulnerable young people. New Alternatives also privately fundraises a small amount of money. But New Alternatives doesn’t spend everything it brings in. What it doesn’t spend, it sends to MAC.
The financial setup is not illegal, but it is unusual for a charity.
The makeup of New Alternatives’ and MAC’s boards is also unusual: Both boards are made up of a majority of people with personal connections to Bruich.
Reshae Cuevas lived in a New Alternatives facility as a foster child — and had a very positive experience. She later went on to work for New Alternatives and had a much worse time.
“It doesn’t make me angry. It makes me disappointed,” said Cuevas. “I had a good experience as a kid. It was my safe space. But I don’t have anything to compare it to as a child. As a staff member I was wondering where the money was.”
Cuevas said the facilities she worked in were, in her view, understaffed. She also said children frequently needed new beds or new furniture. New Alternatives was always taking the “cheap route,” she said.
“To hear there’s $20 million just sitting there… it’s like looking up to someone you idolize as a hero and then finding out who they really are,” Cuevas said.
New Alternatives — through its lawyer John Clifford — denied that New Alternatives takes the cheap route in providing services.
“We are pleased to know that the youth had a good experience while under the care of New Alternatives,” Clifford wrote in an email. “New Alternatives has clean program audits, so without details, I can only assume that this person’s assessment was not shared by the auditors.”
Clifford said New Alternatives created MAC without using taxpayer dollars.
“The assets infused in [MAC] came from non-taxpayer funds accrued by New Alternatives’ private fundraising, investment and prudent financial operations management over 40 years,” Clifford wrote.
New Alternatives, however, receives a small fraction of its money from private fundraising and investments. As New Alternatives’ own audits note, it received 98 percent or more of its funding from the county of San Diego and county of Orange each year between 2016 and 2022. (Clifford said the auditor’s report from 2021 was incorrect.)
In total, New Alternatives received $2.8 million from fundraising and investments between 2015 and 2022. During that same time, it transferred $19.8 million to MAC.
New Alternatives did, however, have roughly $23 million in cash on hand at the end of 2014, just before it began funding MAC. But by 2022 that cash on hand had grown to roughly $32 million.
“If they’re cheaping out on the services they’re providing as a way to accumulate funds and transfer them to this other organization. That’s not good,” said Laurie Styron, the CEO of CharityWatch, a charity watchdog group. “If the money is being taken from taxpayers to help foster kids, the money should be used to help foster kids.”
New Alternatives gets the majority of its money from San Diego County. Supervisor Joel Anderson, when shown Voice’s findings, referred them to the offices of the county administrator and District Attorney.
Supervisor Terra Lawson-Remer also referred the findings to the county administrator’s office.
Clifford wrote that there is nothing unusual about MAC.
“Practically all large, complex nonprofit organizations form foundations to provide for the protection of assets and the prudent management of those assets for the long-term support of charitable programs,” he wrote. “The leaders want to build a strong endowment to sustain grant-making over time. Spending money in the early years becomes detrimental to long-term viability.”
All charities, like New Alternatives and MAC, are overseen by a board of directors. It is best practice for boards to be made up of a diverse group of independent people to ensure the charity is serving the public good – rather than an individual’s private interests.
Usually, board members have a strong connection to the community where the charity operates or to the industry in which the charity operates. Most of New Alternatives’ board have neither, according to its most recent tax returns.
The common characteristic of most people on New Alternatives’ board is that they have a personal connection to Bruich, the CEO.
Thomas Winn, Gary Gillis and Thomas Joyce, who serve on New Alternatives’ board, all played on Harvard University’s football team with Bruich in the 1970s. None of them live in Southern California. Gillis lives in Massachusetts and is a partner in a multimedia production company, according to his Linkedin profile. Winn is a major developer in Sacramento. Joyce worked on Wall Street and lives in Connecticut.
Cheryl Spinweber is Bruich’s wife — and also a board member. Spinweber graduated from Harvard Medical School and is a specialist in sleep medicine, who has worked with the Navy.
Janis Stoklosa was an air safety investigator, who also worked at NASA. She also attended Harvard in the 1970s and visited Spinweber, while Spinweber was working for the Navy, according to a publicly-available visitor log from 1984.
Marc Chasman is a housing developer in Irvine. He worked with Winn at a development company called Lennar Homes, according to available public records.
None of the New Alternatives board members could be reached for comment.
Clifford wrote that the board members have “high qualifications” for serving on New Alternatives’ board.
“It is a dedicated, selfless, intelligent board that believes in ensuring foster children are not left behind. They perform their governance duties in an exceptional manner without compensation and ensure that New Alternatives meets or exceeds all contractual and regulatory obligations, including conflict of interest and compensation practices,” Clifford wrote.
MAC’s board is made up of some of the same people, including Chasman, Joyce, Winn and Stoklosa. The only person not on New Alternatives’ board is a woman named Elizabeth Kaleva, who practices law in Missoula. Kaleva incorporated MAC in 2014 and described the foundation as an “offshoot” of New Alternatives.
She said she is “sort of” a board member and also treasurer of MAC.
“I’m probably not someone who is the best person to talk to about [MAC’s work,]” she said. MAC “theoretically [does] grants and provides resources for kids who are in the system.”
She said MAC is based in Montana, because New Alternatives has a connection to her husband Joel Kaleva. Joel Kaleva is also a lawyer, who previously represented New Alternatives, Kaleva said. MAC lists its address in the same building as a law firm, where Joel Kaleva previously worked.
Kaleva said she believed her husband was also on MAC’s board. But Joel Kaleva never served as a board member for MAC between its founding and 2022, the tax returns show.
He also does not currently serve on MAC’s board, Clifford wrote.
“It’s basically a nonprofit board, there’s a million people on the board,” Kaleva said.
Clifford declined to provide board meeting minutes for New Alternatives or MAC.
MAC’s board, he wrote, meets once a year or when necessary. New Alternatives’ board meets quarterly or as necessary, he wrote.
Bruich’s salary at New Alternatives was $407,500 in 2022, according to the organization’s tax returns.
He and his wife own a house, less than two blocks away from Windansea Beach in La Jolla, valued at $5.2 million by Zillow.
Aside from Bruich’s regular salary from New Alternatives, MAC has paid him an additional $365,000 since its inception. The money it pays him each year has ranged from $35,000 to $95,000. The year it paid Bruich the most money was also the year that New Alternatives made its largest contribution to MAC.
MAC also pays investment management fees to the people who manage its money.
On just one occasion, MAC did something other than pay Bruich.
San Diego County had agreed to fund a study on the effectiveness of San Pasqual Academy, a school for foster kids run by New Alternatives.
“New Alternatives came to the county, offering to cover half of [of the cost of] the study,” Clifford wrote.
UC Davis was set to do the study.
Both the county and UC Davis contracted specifically with New Alternatives for the study to be performed — not MAC, according to county officials and documents obtained by Voice.
MAC did shell out roughly $889,000 for the study — but it’s not clear why MAC needed to be a part of the transaction. New Alternatives initially gave MAC the money. MAC was now spending the money on New Alternatives’ behalf.
Funding studies on foster care is an important part of MAC’s mission, Clifford wrote.
“MAC Foundation paid UC Davis the first half of New Alternatives’ portion as part of the agreement as the study falls squarely within the mission of the MAC Foundation,” he wrote.
Carolyn Griesemer is an attorney who has worked with foster youth in San Diego County for years. She is currently managing director at foster charity called Just in Time for Foster Youth.
“When any non-profit accepts government funding, it takes on the crucial responsibility to manage and steward those resources wisely for the benefit of those they are meant to serve. Foster youth, with their complex needs, deserve to fully benefit from every resource available to them,” she wrote. “If New Alternatives redirected funds for some purpose other than what was intended, it would seem to be a betrayal, not only to the vulnerable youth who relied on their support but also to the taxpayers who entrusted their money to meet those critical needs.”
Skylar Rispens, a freelance reporter in Montana, contributed to this report.