Foundation Continues to Lose Money

Posted November 17, 2004 at 6:06pm

Four years of continuing financial difficulties could force the Congressional Award Foundation to close its doors unless the organization finds new resources, the Government Accountability Office reported Tuesday.

An audit of the foundation, a nonprofit, private-public partnership created by Congress in 1979 to honor youth achievement, showed the organization’s net assets had dwindled to $210,122 in September 2003, from more than $990,000 at the start the fiscal 2001.

Despite reducing its losses from more than $330,000 in fiscal 2002 to only $5,990 in fiscal 2003, the GAO audit noted the foundation faces “increasing difficulties in meeting its financial obligations” and questioned its continued viability.

“While the Foundation has taken steps to decrease its expenditures, those steps may not be sufficient to allow it to continue operations,” the report states. “Unaudited financial data compiled by the Foundation as of June 30, 2004, showed that the Foundation’s financial condition has not improved, thus raising substantial doubt about the Foundation’s ability to continue as a growing concern, absent a means of generating additional funding.”

While foundation officials contribute their cash flow problems to a decline in charitable contributions to the organization — it is prohibited from receiving federal funding and relies on private fundraising and the Congressional Award Trust for its financing — they assert that a dramatic rise in participation has put an unexpected financial strain on the group.

“The number of young people wanting to participate has outstripped the resources the Congressional Award Foundation Board has been able to provide relative to charitable contributions,” said John Falk, who chairs the board.

Participation in the program has surged to more than 18,000 individuals, Falk said, up from the 6,077 enrolled in 2000.

“They’re kind of a victim of their own success,” added Dan Whiting, a spokesman for Sen. Larry Craig (R-Idaho), who serves on the foundation’s board.

The Congressional Award, the only prize authorized by Congress other than the Medal of Honor, is presented to youths from the ages of 14 to 23 who complete requirements in four areas: volunteer public service, personal development, physical fitness and expedition/exploration.

Despite the foundation’s downward financial spiral, Falk said he remains optimistic about the organization’s future.

“I’m incredibly bullish on the fact that with the proper funding resources, this program can grow exponentially,” Falk said.

In recent months, the group has overhauled its fundraising efforts, taking a “back to basics” approach, Falk said, including the cancellation of traditional fundraisers, such as an annual awards gala and golf and tennis tournaments, in favor of smaller events with lawmakers.

“We have begun … doing events focused around individual Members who are very supportive of the program, and we have been rebuilding the fundraising base through those individual Member events,” said Falk, himself a 1986 Congressional Gold Medal recipient.

The foundation also stands to receive a significant boost from legislation that would allow it to receive up to half of its funding from federal sources and authorize up to $750,000 annually for the foundation.

The legislation, which includes language reauthorizing the Congressional Award Act after its expiration last month, passed out of the Senate this year but is still pending in the House.

Craig’s office remains confident the bill would be completed before the end of the 108th Congress: “It’s a very high priority to get it done this year,” Whiting said.

In the meantime, the foundation has sought to cut its expenses, reducing its operating costs from more than $1.7 million in fiscal 2002 to approximately $761,000 in fiscal 2003.

Those cuts include the resignation of the foundation’s director of finance and administration, who now serves in an unpaid position as treasurer of the foundation’s board of directors. The foundation also reduced its staff by more than one half in fiscal 2004.

Other cuts included a slimmed-down awards program for recipients of the Gold Medal, the highest achievement level of the Congressional Award program. The program, formerly a four-day event that offered participants a variety of tours, now includes only the awards ceremony.