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Capital Foundation Approved Over Nonprofit Objections

The City of Alexandria will have a new Capital Development Foundation.

Councilman David G. Speck proposed this Foundation some time ago as a way to raise money to meet the city’s growing capital needs. The Foundation will solicit contributions from corporations and from the bequest of estates.

“I would never have proposed this if I thought that it would harm any of our nonprofit agencies,” Speck said. “The Foundation will seek funds from an entirely different group of donors than do the nonprofits.”

The Foundation was approved by Council Saturday by a vote of 5-2, with Vice Mayor Bill Cleveland and Councilwoman Redella S. "Del" Pepper voting against it.

The next step is for City Manager Philip G. Sunderland to report to Council on the steps that are needed to create the Foundation. The proposal calls for the city to fund it at the level of around $115,000 per year for the next five years. At the end of that time, the Foundation is supposed to be self-sufficient.

The nonprofit community did not agree with this creation. “We solicited the input of all of our member agencies and the 20 representatives who voted agreed that we should not support this foundation,” said Elsie Mosqueda and Carol Lofter-Thun, representing the Alexandria Council of Nonprofit Agencies.

“In this time of extremely tight budgets, $541,613 is a significant amount of city funding to gamble in the hopes that potential donations will exceed that expenditure. This half million dollars could be better spent restoring necessary programs that may be reduced or eliminated due to state budget cuts,” they said.

“There is potential for the appearance of undue influence, since it could appear that a donor with business before the city is able to influence the outcome by making a substantial contribution to the Capital Development Foundation. The city has taxing and bonding authority to raise funds for capital purposes without this potential perception of conflict of interest, and gifts to the city are already tax deductible.

THE TWO representatives added, “No one can be absolutely certain whether fundraising by the proposed Capital Development Foundation will have a negative impact on donations that local nonprofits need to serve clients with critical services including shelter, food and childcare.

"However, we do know that nonprofits are seeing funding drop from the combined impact of the poor stock market, the sluggish economy, significant state and federal deficits and the United Way scandal. Since this drop in funding coincides with an increase in the needs of Alexandria’s most vulnerable residents, any initiative that has even the potential for further reducing resources to our vulnerable neighbors is particularly disturbing.

"Foundations, corporations and businesses often have an annual budget for charitable giving, so donations to a Capital Development Foundation likely would be at the expense of contributions to local nonprofits…”

Councilman William D. Euille spoke to the issue as well. “I have a lot of knowledge and experience in dealing with this issue and certainly sympathies with the concerns that have been expressed,” he said. “There is potential that this Foundation will compete for the same dollars as the nonprofits: that could happen and it may happen but at the same time, first and foremost, citizens will give where they feel is the greatest need and they will always give to help their fellow citizens. If I thought that citizens who give to nonprofits would suddenly stop giving to them I would never support it. I see it as reasonable and necessary for capital needs.”

Pepper, in speaking against the proposal said, “…In this time of extremely tight budgets, $500,000 is a lot of money to gamble. There is also the potential of undue influence ... Rather than create another entity, why don’t we strengthen the Alexandria Community Foundation,” she said.

“Remember,” Speck said, “what Council gives it can also take it away. If we find that this is not working, we can always do something else.”