News: CJ Exclusives

Questions Plague State-Funded Group

Congressman Frank Ballance at center of controversy

The director of a Warren County nonprofit substance abuse program that has received at least $1.8 million from state taxpayers has refused repeated requests to turn over public financial records as required by law. An investigation by Carolina Journal indicates that the records probably don’t exist.

Another newspaper, the Littleton Observer, which serves Warren and Halifax counties, reported that it also was unable to obtain financial records of the John A. Hyman Memorial Youth Foundation and that the organization doesn’t appear to be serving any clients.

Eddie W. Lawrence, director of the foundation, told CJ he did not have the required IRS Form 990, Return of Organization Exempt From Income Tax. “Congressman (Frank) Ballance is chair of that (Hyman Foundation), and he has someone working on pulling the 990s together,” Lawrence said. “It will be Congressman Ballance you need to speak with.”

Before being elected to the U.S. House from the 1st District in 2002, Ballance served in the N.C. Senate and had been deputy president pro tempore since 1997.

Hal Sharpe, publisher of the Littleton Observer, told CJ that both Lawrence and Ballance have refused to respond to numerous requests for information about the foundation.

Tax-exempt nonprofits that have annual receipts greater than $25,000 are required to annually file Form 990 with the IRS. The information contained on the form includes the names and salaries of officers, the source of funds, and the expenditures by category. Copies of the past three years are to be made available to the public on demand, at the organization’s place of business during normal business hours.

Records on the foundation, which was started in 1985, have been difficult to locate. But CJ has determined that for the past six years the foundation, named after Hyman, the first black North Carolinian to be elected to Congress, has received at least $1.49 million in total funding from state government. For the three years before then it received $100,000 per year.

The grants were awarded through the N.C. Department of Correction. Correction Department officials categorized the money as a “pass through,” which means that the department wrote the check but took no responsibility for program oversight or outcomes.

In addition to his role with the foundation, Lawrence works a full-time state- government job based in Raleigh. Since 1985 he has been the director of the North Carolina Human Relations Commission. His current annual salary is $66,351.

On March 26, Lawrence appeared before the Joint Appropriations Subcommittee on Justice and Public Safety to ask for continued funding for the substance-abuse program. For the next fiscal year he asked for $250,000 for the program, which is the main activity of the Hyman Foundation.

Lawrence presented information to the committee stating that for the fiscal year ending June 30, 2002 the sole source of funds for the foundation was $225,000 from the Department of Correction. Expenditures included $112,550 for salaries, $75,346 for “prevention mini-grants,” and $3,000 for rent. The previous year’s information obtained by CJ included $37,550 for rent. CJ has been unable to determine whether the rent was for the space at Lawrence’s church.

Lawrence’s report also said the foundation had served more than 5,000 clients and awarded numerous prevention grants to aid families in the development of youth.

Gov. Mike Easley’s proposed 2003-05 budget would terminate funding for the Hyman Foundation and three other nonprofits getting funds through the Correction Department. At press time, the most recent version of the House budget contained funding for all four programs.

On April 9, CJ reached Lawrence again at his state office. “We will get back with you. I called Congressman Ballance on that today and we will get back with you. I will give you a call on when you could get the records. This is not the time to discuss this.” After repeated questioning, he refused to make any records available at the foundation’s office.

Lawrence said the foundation’s office is located within the Greenwood Baptist Church building in Warren County. In addition to his state government job and his job with the foundation, Lawrence is also the church’s pastor. Ballance’s 2002 campaign biography says he is a member of that church and is chairman of the Deacon Board.

CJ contacted Ballance’s office in Washington on March 10. Communications Director Joanna Kuebler said that she was unaware of the Hyman Foundation but that she would look into it.

On April 11, Ballance called CJ to say that an accountant was working on the foundation’s 990s. When asked directly whether the foundation had ever filed a 990 form, Ballance would not answer the question but said the information should be available next week.

According to IRS regulations, a tax-exempt organization that fails to file a required return is subject to a penalty of $20 a day for each day the failure continues. The maximum penalty for any one return is the lesser of $10,000 or 5 percent of the organization’s gross receipts for the year.

Carrington is associate publisher of Carolina Journal