Tri-Valley Foundation vacates headquarters on Stoneridge Drive
2011 audit shows red flags that could have alerted TVCF board members
The doors to the Tri-Valley Community Foundation have been locked for more than a week now, and although the lights are on, most of the furniture is gone.
Calls to the foundation go directly to voicemail and its recently hired PR firm, Full Court Press, has not returned calls or emails, but the foundation did provide financial statements for 2009 and 2010 after a request from the Pleasanton Weekly.
An IRS declaration filed by the TVCF says the charity "makes its governing documents and financial statements available to the public upon request."
A certified public accountant who reviewed the financial statements on the condition of anonymity said it didn't take long to uncover red flags in those documents that should have alerted board members to problems at the foundation long before this year, when it found itself $3 million in debt.
A May 24, 2011, audit notes "the foundation has suffered significant deficiencies in net assets that raise substantial doubt about its ability to continue as a going concern."
"The 'going concern' mentioned in the auditor's report is a huge red flag that the entity may not be able to continue operating and may go out of business within the next 12 months," the CPA said.
That audit, prepared by Robert Lee and Associates of San Jose, also says, "As of June 30, 2009, the foundation had a decrease in total in net assets of $550,963. As a result of these deficits, restricted funds from agency funds were used for working capital purposes with the donors' consent. These factors create an uncertainty about the foundation's ability to continue as a going concern."
Operating costs during the 2009-10 fiscal year for the TVCF climbed from nearly $1.3 million the previous year to $1.9 million. That same time, salaries and benefits went from $340,946 to $417,592, leaving the foundation owing more than $172,000.
That debt should also have been a concern to board members, the CPA said.
"Clearly the negative net assets of $172,334 is very concerning. Liabilities jumped up $250,000 from the 2009 (audit) to 2010, indicating they are unable to pay certain obligations," the CPA explained, adding that direct costs for programs climbed $430,000 from 2009 to 2010. "This is a huge amount that doesn't really make sense if they are trying to cut costs and stay viable."
The CPA also pointed to the trend of expenses exceeding revenues year after year as worrisome. Tax forms filed by the TVCF indicate that began in 2006.
"Having negative cash flow from operating activities is always a bad sign that the entity is unable to generate positive cash flow from their day-to-day operations," the CPA said.
Despite requests, the foundation did not provide a copy of its most recent audit. That's the one that Board President and CEO Ron Hyde said prompted what he called a "deep audit" into where the money went.
Hyde, who took over running the day-to-day operations at the TVCF after former President Dave Rice was fired in May, said earlier that the foundation is seeking criminal prosecution against Rice.
However, the TVCF's most recent tax form, released last week at the request of the Pleasanton Weekly, indicates that Rice's salary went from $98,51 in 2009-10 to $140,116 in 2010-11 -- the same time the audit shows the foundation was falling deeper and deeper into a financial hole. Hyde has recommended the TVCF file Chapter 7 liquidation bankruptcy.