Chamber of Secrets, Part II: Will New Hope business group’s prospects for the future be haunted by its past?

By Charlie Sahner

Conversations with leading Chamber of Commerce officials in recent weeks reveal an organization with no shortage of enthusiasm for improving the prospects of New Hope businesses. But can the business group get where it needs to go without accounting for past irregularities in the wake of recent revelations about financial problems? 

And, despite the recent tightening of chamber disbursements by Treasurer Grover Stults, fundamental ethical compliance and control procedures remain absent.

One common ethical compliance procedure and Internal Revenue policy revolves around record retention. An examination of New Hope Chamber of Commerce Federal tax returns from 2006-2012 (2013 has not yet been submitted) shows numerous preparers indicating that the organization had a document retention policy, and also provides detail on which officer was charged each year with maintaining statements and records.

Nonetheless, the inability of current and former chamber officials to detail budgetary and tax return line items or produce records, along with an examination of available chamber documents, appear to reveal that substantial financial and cultural history may be missing. One example: current chamber leadership cannot provide detail on whom held officer, board and committee positions in recent years.
Said Treasurer Stults, “Roger [Green] can probably get your lists of responsible parties, because I fail to have them.”

Asked if the chamber currently has a record retention policy, a conflict of interest policy, and/or a competitive bidding policy on contracts and other expenditures, Stults replied, “We are redrafting the bylaws and other policies and rules of conduct to document more stringent operating procedures for those who will follow in our footsteps.”

In fact, the chamber doesn’t appear to have ever had a conflict of interest policy, according to tax returns, along with “whistleblower”, prejudice, equal opportunity employment, or harassment policies.

Said Chamber President Green, “We cannot categorically state whether the Chamber has a record retention policy, conflict of interest policy, or competitive bidding policy on contracts and other expenditures. We can state that if such policies exist, they do not appear pervasive in the Chamber’s day-to-day activities and decisions.

“Also, we can state that historical records one would normally expect to find at a longstanding Chamber of Commerce are not readily available in the New Hope Chamber,” added Green.
“We are committed to enacting a complete set of policies that promote clarity and transparency before the end of this Board’s term in March,” he continued. “We expect to approve a system of financial guidelines at our meeting next Tuesday. We have assembled draft guidelines for how to conduct completely transparent elections, and hope to complete these within the next one to two months. We welcome help from our members and the entire Greater New Hope community in identifying items to include in our fundamental set of ethical compliance and control procedures.”

Identifying a set of procedures should not prove daunting. A quick glance at internet resources reveals several compliance plans from chambers around the nation. One group with its ethical policy act already together is the South Columbia County Chamber of Commerce in Oregon. Back in 2006, they published an excellent code of ethics policy online, and the document begins, “Chambers have only one class of stakeholders…Members. The Chamber must earn the respect and trust of its Members. Trust is earned with routine ethical behavior, built around honesty and fairness.

“Members are not just customers,” the document continues. “Members expect more value and deserve more respect than is available in the typical customer interaction. Directors and Staff have a fiduciary responsibility to all members…Service differentiates; democratic control provides a decision making environment that elevates creating value for the Members above profit accumulation at the Chamber.”

Green apparently shares that concern for creating member value, saying, “When this Board assumed leadership on April 1, our top priorities were to stabilize Chamber finances and build bridges to other organizations that are our natural partners. We have made great strides in these areas already.
“Long-term critical success factors include building a system of clarity and transparency and determining better ways to support our members in their pursuits to build high-value, successful businesses in New Hope and the surrounding towns,” he continued.

Another ethics-related question on the Federal income tax form 990 typically submitted by chamber tax preparers requires a declaration of any family or business relationships between officers, directors and key employees. While a review of available tax records indicates this line has always been checked “no,” anecdotal information suggests that this may not have always been the case and, yet again, information on specific processes and transactions is scant.

And there are other line items in Chamber of Commerce tax filings dating back several years, including relatively large expenditures referred to simply as “parties,” “award ceremonies,” “awards,” “PR,” “advertising,” “technology,” and “art show,” among others, that lack meaningful breakouts. One example would be the Arts and Crafts Festival, which grew from revenue of roughly $70,000 in 2010 to $80,000 in 2013, while event expenses exploded from $17,000 to $40,000.

When queried about festival expenses, Chamber Secretary and Arts and Crafts Committee Chair Linda Rowe said, “While I would love to answer your questions regarding finances that was not my job with the show! Since I started on the committee, I have been solely responsible for the logistical side of the show. I can tell you that over the past three years we incurred additional expenses when we had to move the venue from North Main Street to Union Square one year and then to the school the past two years!”

But the cost of additional security, transportation, and rental expenses still doesn’t add up when trying to account for the rapid growth in event expenses, and current chamber leaders who can speak with any specificity to that point are hard to find.

Examples of other anomalies visible in chamber tax records over time include employees that appear incorrectly designated as “consultants,” late IRS filings and/or use of EZ versions of IRS forms, and funds earmarked for fireworks being used for other expenses or fireworks expenses being listed as chamber expenses during periods when the organizations may have been separate.

For those interested in reading the information for themselves, New Hope Chamber of Commerce tax returns from 2006 to present are available online.

Asked the difficult question of whether or not chamber leadership currently has total control over its finances, Green said, “Operating under the Draft Financial Guidelines prepared by our Treasurer and President, the Board believes we have complete control on all expenditures going forward. We do not have a complete, clear understanding of all the various financial transactions and decisions that occurred before we came together as a Board this past April.”

Accountant Peter Augenblick, who prepared the chamber’s tax returns in 2012 and 2011, would not return phone calls seeking information.

Asked about prior budget expenditures and other financial matters, Chamber Treasurer Stults sidestepped more than 15 questions posed by this reporter, saying “Fifteen is a BIG number. Are you willing to compensate me at $200 per hour to find your answers?”

Stults goes on to say, “It is my additional goal to give Linda [Rowe] and Sharon [Flanagan] the support they need to orchestrate another successful Arts & Craft Show. I appreciate your focusing on the past, while I am charting a course for a successful future.” Rowe, Flanagan, and a former chamber president were at the center of a controversy involving cash awards received at a 2013 ceremony.

While the desire to move on during a crisis and focus on the future is not unusual, can the New Hope Chamber of Commerce fully move forward on its vital quest without a thorough accounting to the business community of what went on in the past?

 

Time will tell. But Green says he’s committed to operating more transparently.

 

“Within the week, we will announce a date for a community meeting at which all Greater New Hope businesses, whether Chamber members or not, can come ask questions and state their opinions about how the Chamber can serve the community,” he said. This will be the first of a regular series of open meetings.”