Aspen looks at ways to monitor nonprofits’ finances
In the wake of the alleged embezzlement at the Red Brick Council for the Arts, the city is pondering new methods of financial oversight for the nonprofit organizations it financially supports.
Aspen city staff members are researching methods to have more checks and balances over the 100 nonprofits that annually reap a combined $1.5 million in grants from the City Council. Grants range from $500 to $140,000.
Councilman Ward Hauenstein brought the idea forward after the city’s Sept. 28 announcement that the Pitkin County District’s Attorney was investigating Angela Callen for stealing roughly $150,000 from the Red Brick Council for the Arts during her time as its executive director.
In June, after the allegations surfaced, the Red Brick Council fired Callen, who in her role oversaw the Red Brick Center for the Arts through a management contract with the city.
The investigation is ongoing and criminal charges have yet to be filed against Callen.
Over at least the past decade, the city has annually given a $30,000 grant to the Red Brick Council.
A portion of the City Council’s work session Monday addressed the financial-oversight issue, as well as the possibility of nonprofits being trained on how to troubleshoot their finances through forensic accounting.
“My focus on this was one, wanting to restore faith in nonprofits in the process of granting them city money and safeguarding that money,” Hauenstein said at the meeting.
The councilman suggested that the city have access to nonprofits’ transaction details, as well as the city’s performing random checks on the organizations.
“We can do anything,” city finance director Don Taylor said. “It depends on how much we want to spend on this kind of thing.”
Taylor said the city’s requirements placed on nonprofits could be tiered based on their size. Some of the larger nonprofits that receive city grants, such as the Aspen Music Festival & School, have a team of accountants and wouldn’t need to undergo training for troubleshooting.
Under various scenarios presented by Taylor, nonprofits receiving grants of less than $5,000 would not be required to do an independent financial review or a city review. Nonprofits receiving grants of $5,000 to $100,000 would be subject to a professional financial review but not a city review. Those awarded with grants of $100,000 to $250,000 would see their financial statements independently audited, while those landing grants $250,000 or higher would be subject to an internal control audit and a city review.
Employing a simple requirement that city-supported nonprofits have a second signature on their transactions would be a good starting point, Councilman Adam Frisch said. With internet banking, Frisch said, the financial oversight can be lacking.
“That is where you see a lot of this happen,” he said. “That is where the risk can happen.”
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