Two principal members of the 36-year-old Howard Brown Health Center ( HBHC ) announced Nov. 4 that the community healthcare provider needs to raise $500,000 over 50 days and an additional $500,000 next year or risk closing its doors.
CEO Jamal Edwards and Board Chair Mark Andrews announced that the Center is also determined to chart a new way forward. In order to do so, HBHC asked the community to participate in a "Lifeline Appeal" by providing direct donations. In addition, the Center is taking steps like the selling of assets, to bring in more money.
HBHC's troubles began in early 2010, when the center announced the ouster of its CEO Michael Cook and CFO Mark Joslyn due to mismanagement of funds. Jamal Edwards, formerly a partner in the law firm of Kirkland & Ellis, took over the job of CEO in April. Edwards has been overseeing a detailed analysis and estimate of the mismanagement in question. As both he and Andrews emphasized, the truth was irrefutable and HBHC was left badly in the hole. The mismanagement amounted to $3 million over the course of three years prior to the end of 2009.
Moving forward, the center's staff and board are taking steps to ensure that such mismanagement does not happen again. One step is to have an outside law firm oversee the restructuring of HBHC, while another is to institute a compliance committee ( already in effect ) . A third step involved applications for new, opening board memberships ( seven new seats ) from the community. Both men also emphasized that key personnel in the leadership are determined to do what it takes to get HBHC back on its feet, foregoing their salaries if necessary.
Asked about the mood at HBHC, Edwards said that the staff had been told of the situation before the press conference and that their commitment to providing care had not changed. Asked how matters had come to this stage, Andrews freely admitted that the Board could have done things differently: "We should have seen more of these problems early on." But he also emphasized that they were committed to moving forward with new controls in place.
In a post-conference interview with WCT, Edwards provided more specifics about what could happen at the Center without the infusion of cash: "We could not pay our staff, would have to cut services, and stop the clinic." He said that the recent overhaul had "stopped the bleeding" but the previous liabilities incurred constituted a big sum of money, and they were being transparent to the community while asking for assistance. Asked about specifics about the mismanagement, Edwards pointed to the center "living beyond our means." For instance, it was providing medical services it could not afford, and took in a couple of leases which proved unwise in the long run. These included the newer office spaces on Broadway; Edwards has already relocated his office to the main Sheridan space. As he put it, "anyone connected to the mismanagement is gone."
As for the reconstitution of the Board, Edwards was clear that some current members may have "had their capacity exceeded" and that those conflicted about working in the new culture would be urged to move on. Asked what qualifying new members would be like, he said that ideally they would be members of the community, used Howard Brown services, and showed a commitment to fundraising, an arena in which the Center had not been aggressive enough.
Both Andrews and Edwards reiterated their commitment to seeing the Center through. Asked why he felt the Center was so important to the community, Edwards responded, "We're at a pivotal moment in our history [ as a community ] . We lack equal rights to marry, greater numbers of our youth are committing suicide in record numbers, and more of us are losing healthcare by the day. Whether you are a drag queen; a gay man; someone recently diagnosed with HIV; a straight person—you can come to Howard Brown and be treated with dignity. At Howard Brown, we're committed to providing quality and culturally competent care to everyone who needs it."
Donations to the Lifeline Appeal may be made directly on the Center's website, www.howardbrown.org . The Center is also urging people to shop more often at The Brown Elephant. Other options are also listed on the website.
Next: Details about HBHC's financial plans.
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FROM A PRESS RELEASE
Funding crisis linked to previous NIH grant fund mismanagement;
matter referred to Office of Inspector General
CHICAGO—Nov. 4, 2010—After 36 years of providing a steady lifeline to those in need in Chicago, Howard Brown Health Center is launching a public appeal for Lifeline support, needing to raise $500,000 in 50 days in order to sustain its health and wellness services and to keep operating.
During a news conference today at Howard Brown, Jamal M. Edwards, President and CEO of Howard Brown since June 1, and Board Chairman Mark D. Andrews, announced that a restated audit has revealed a deep financial deficit—the result of previous mismanagement of grant funds. The deficit threatens Howard Brown and its programs that serve 36,000 youth, adults and seniors annually.
Related to the cash shortfall, Howard Brown also announced it was recently notified that the National Institutes of Health ( NIH ) is making a referral of the matter of past financial mismanagement of NIH federal grant monies to the U.S. Department of Health and Human Services' Office of Inspector General ( OIG ) .
"We will work cooperatively with the Inspector General's office, as we did with the NIH, as they examine the past financial mismanagement that included misusing federal grant funds. Unfortunately, this is another issue that we are working to address that stems from past management's practices," said Edwards, who became president and CEO two months after the Howard Brown Board of Directors dismissed the previous executive leaders. "This is a serious threat to Howard Brown's programs and its survival, and stems from the mismanagement of over $3 million of grant funds between 2006 and March 2010."
Shortly after being notified by the NIH, the Howard Brown's Board initiated its own review. The internal review found that the grant money in question was likely used to cover other operating expenses during cash shortfalls
In August, Howard Brown turned its findings over to the NIH, which conducted a review and in October determined that the matter should be further reviewed by the Office of Inspector General. Also, in August, the NIH transferred $539,000 from Howard Brown's federal grant account to Northwestern University, which Howard Brown voluntarily agreed should become the new lead agent for the grant supporting the Multicenter AIDS Cohort Study ( MACS ) . This was an administrative, not punitive, action. When Northwestern assumed control of the grant, it was entitled to remaining balance of the MACS grant account. Unfortunately, because the MACS account was overdrawn, funds from Howard Brown's other grant accounts had to be used to make up the difference. While the transfer was the right action for the study and its participants, said Edwards, it left a serious operating cash short fall that adds to Howard Brown's financial challenges.
Through its Lifeline appeal, Howard Brown needs to raise $500,000 in 50 days in order to sustain operations and help ensure its financial stability. Without the emergency funding, Howard Brown could close. Board members are currently raising dollars and Howard Brown's executive team members are contributing through salary reductions and personal donations.
"Our team is deeply committed to resolving the effects of past mismanagement and preserving the community lifeline that Howard Brown provides," said Edwards. "But to do so we need a lifeline from the community. We know that we are asking a lot from our supporters, because we're asking the community to trust and support Howard Brown on the heels of past financial mismanagement. Let me assure you that this is a new day here, and the new executive team is committed to saving Howard Brown."
"The mistakes of the past will not happen again," he added.
The new executive team, including new VP and Chief Financial Officer Editha Paras, has implemented several new financial systems and hired new auditors. It has implemented new financial procedures and reduced operating costs, while still maintaining services and programs that are grant-funded. The new accounting systems, cost-cutting moves and fundraising are part of a three-year recovery plan to make the organization debt-free, financially healthy and a stronger provider of critical community services.
"Together we're working toward a new day at Howard Brown. We want, and need, to rebuild our relationship with the community by being more open and transparent and using the lessons learned to move forward," said Board Chairman Andrews. He added that the Board obviously wishes it would have been made aware of the grant mismanagement earlier and has taken proactive steps to prevent such problems from ever happening again.
The board took action when it learned of the possible mismanagement of grant funds. The Board investigated the issues, followed the recommendations of its counsel, imposed a temporary restriction on accessing MACS grant draws above a certain amount without board approval, voluntarily transferred the financial administration of the MACS grant to Northwestern University, replaced top management, retained new auditors, created a new compliance committee, and has been working closely with new management to ensure the operations of Howard Brown are conducted appropriately and with necessary controls.
"We're volunteers who want to do the right thing to ensure the future of Howard Brown. For most patients, Howard Brown is their only means of access to quality and compassionate healthcare, counseling and critical human services, and those critical services are now in serious jeopardy. We're turning to donors—large and small—to help us keep Howard Brown open as we support the new leadership team in its plans to turn around operations and restore financial stability," Andrews said.
If Howard Brown is forced to close, the loss would affect thousands of patients and clients:
—More than 6,000 individuals will lose access to primary medical care, many of whom live with HIV/AIDS;
—5,000 LGBTQ teens will be shut out from critical services provided at the Broadway Youth Center, at a time when gay teens and suicide are making national headlines;
—The Lesbian Community Care Project will no longer be able to operate, leaving thousands of women who seek gynecological care, critical medical screenings and domestic violence counseling and support without an alternative.
More than 20 national research studies and clinical trials, ranging from the largest and longest running HIV research study to cancer prevention strategies for men and women will be in jeopardy.
The public can also help answer the emergency appeal to help save the Howard Brown lifeline for the thousands of youth and adults by taking these steps:
—Shop at one of the Brown Elephant Resale Shops in Boystown, Andersonville and Oak Park.
—Participate in one of the fundraising events that will be happening in the next several weeks.
—Use TRIAD Health Practice, 3000 N. Halsted, for insured medical services. Call 773-296-8400.
To donate to Howard Brown's Lifeline appeal, please visit www.HowardBrown.org or call 773-388-1600.
About Howard Brown Health Center
Founded in 1974, Howard Brown is now one of the nation's largest LGBTQA organizations. The agency serves more than 36,000 adults and youth each year in its diverse health and social service delivery system focused around seven major programmatic divisions: primary medical care, behavioral health, research, HIV/STD prevention, youth services, elder services, and community initiatives. Howard Brown is a multi-site operation based in Chicago and includes a main health and research center in the Uptown neighborhood TRIAD Health practice at Illinois Masonic Hospital, the Broadway Youth Center, and three Brown Elephant resale shops in Chicago and Oak Park.
