Report: Award Foundation in Trouble

Posted May 16, 2007 at 6:45pm

A recent financial audit of the Congressional Award Foundation shows the organization is having difficulty meeting its financial obligations and is putting its ability to continue at risk, marking the fifth consecutive year such a warning has been issued.

But a foundation official said Wednesday that the nonprofit has “really turned a corner” with its fundraising efforts in fiscal 2007 and should be on sound financial footing in the future.

Charged with overseeing the Congressional Award — handed out each year to young people who show they are dedicated to public service — the foundation showed a loss of almost $44,000 in fiscal 2006, according to the Government Accountability Office report.

The GAO audit noted that while operating revenue and other support increased to $656,000 in fiscal 2006 — a 49 percent jump from $442,000 in fiscal 2005 — operating expenses also rose 49 percent, largely due to a $109,000 increase in salary, benefits and payroll taxes.

Plus, fundraising expenses increased to $148,000 in fiscal 2006, compared to $43,000 in the previous year, the report states.

Two employees even loaned the organization money to cover operating costs and payroll needs, according to the report, and the foundation sold about $35,000 worth of equity securities in 2006 to cover operating costs.

Part of the reason for the agency’s struggles in fiscal 2006 stemmed from the fact that so many more young people decided to take part in the program, according to Erica Wheelan Heyse, the foundation’s national director.

“I think their concerns are that our program is growing so exponentially, and we haven’t been able to raise the financial support needed,” Heyse said of the GAO report. “We’ve really turned a corner, and we’ve been able to support the program.”

In its report, the GAO notes that fiscal 2006 marked the fifth consecutive year that the agency has raised doubts about the foundation’s ability to continue. In response, the report states, the foundation modified its fundraising approach to emphasize more frequent, but smaller and less expensive, events.

Perhaps those efforts are beginning to pay off. In the report, the GAO writes that “financial data compiled by the Foundation as of February 28, 2007, indicate that the Foundation’s financial condition showed some improvement during the first 5 months of fiscal year 2007.”

And in a May 7 letter to the GAO, Heyse and Daniel Scherder, the foundation’s treasurer, wrote that things have continued on an upswing.

“As of April 30, 2007, the Foundation has received over $494,000 in contributions and pledges for fiscal year 2007 and recorded a net income of over $89,000, demonstrating significant improvement in funding over fiscal year 2006,” the two wrote. “Projections show the Foundation will not only meet, but exceed our budgeted revenue of $600,000 for the year.”

Much of the foundation’s budget comes from donations, raised through fundraising events such as a golf tournament, lunches and direct mailings, Heyse said. Most donors come from the corporate community, although past participants, parents and Members of Congress have donated.

The Congressional Award is the only honor recognizing young people ages 14 to 23 for voluntary public service, Heyse said.

About 24,000 youth across the country participate in the program, along with 10,000 adult volunteers, Heyse added.

To take part in the award program, participants set goals at the start of the program and are honored for achieving them.

There are six different awards given out to participants, with the highest honor being the Congressional Award Gold Medal, which recognizes achievements in categories of volunteer public service, personal development, physical fitness and cultural exploration.

Proof that the program is growing is seen in the number of participants set to receive Gold Medals this year, Heyse said. About 270 people will be awarded the honor, compared with 170 participants last year, and more recipients could be announced before the awards are presented next month.

“We are really on target for not only meeting but exceeding our budget this year,” Heyse said. “Everyone is really excited about that, and we should have a great report next year.”