N.H. Aid Organization for Needy in Financial Crisis

A North County nonprofit social services organization with programs in the Upper Valley that provides assistance to the needy has been taken over by a court-appointed trustee after running into financial trouble.

A probate judge has appointed a special trustee to oversee the operations of Tri-County Community Action Program, which has an office in Lebanon, at the request of the New Hampshire Attorney General’s Office after it became clear CAP was struggling to make payroll, facing overwhelming debt and suffering from financial mismanagement.

The move follows the recent departure of the organization’s CEO and CFO and the suspension of its board of directors by state regulators.

Anthony Blenkinsop, director of the Attorney General’s Charitable Trusts unit, called the state takeover of CAP an attempt to “right the ship” and to keep the organization’s more than 30 projects and programs afloat. “It is definitely out of the ordinary,” he said, for the state to step in and relieve a board of its duties. “In 2012 I think there was one other case. It doesn’t happen very often.”

CAP helps thousands of residents in Carroll, Grafton and Coos counties, offering wide-ranging programs including drug and alcohol counseling, fuel assistance, a homeless shelter, weatherization services, elder care, dental programs, transportation services and more.

“It is definitely a very important entity, without a doubt,” Blenkinsop said, but it is “facing some fairly serious financial issues.”

Joie Finley Morris, a homeless outreach worker for Tri-County CAP in Lebanon, said that none of the programs that the local office administers should be affected.

“Basically, we’re in debt. What nonprofit isn’t?” Finley Morris said. “This is just the attorney general stepping in to straighten up what’s in Berlin. I don’t see any programs being affected.”

Tri-County CAP provides fuel and electric assistance to people in Lebanon, Hanover, Orford, Lyme, Enfield, Canaan, Grafton, Orange and Dorchester.

Finley Morris said that financial support for the programs that are available in Lebanon is raised locally. For instance, she raises all the money that supports homeless assistance and the funds for fuel assistance comes from the federal government. The organization also seeks financial help from all nine towns in its service area to “keep the doors of the office open.”

“I have very close accounting of where the money goes and where it’s coming from,” Finley Morris said. “I have a very personal relationship with a lot of donors.”

Finley Morris often takes people who are living on the streets and pays for a hotel room on really cold nights. Other times, she’ll call a taxi to take someone to a shelter. People who use the local services, she said, shouldn’t be afraid of what’s happening in Berlin, calling the ordeal simply “administrative issues.”

According to court documents, over the past 30 months Tri-County CAP has taken on more than $2 million in debt. The non-profit has also drawn on restricted funds granted for specific federal and state programs to cover general operating expenses, including $589,000 from the fuel assistance program, $102,000 from the Community Development Block Grant fund and $477,000 from the Head Start Program.

The documents also say Tri-County CAP currently owes $730,288 to vendors that it cannot pay if it is to continue to make payroll, and the Attorney General’s office learned CAP had removed funds from the Guardianship Services account and used them to cover its own operating expenses.

CAP’s chief financial officer, former Berlin city councilor Dori Ducharme, resigned on Dec. 3, according to Peter Higbee, CAP’s chief operations officer, one day before discussions with regulators began. She had been working part-time for several months since the fall when she moved to southern New Hampshire.

The next day CAP’s CEO Joe Costello and board chair Bill Hatch met with officials from the Department of Health and Human Service and the Attorney General’s charitable trusts unit in Concord. According to court documents both Hatch and Costello expressed concern about the financial condition of CAP and said there was a tremendous cash flow issue. The two men said CAP had assumed significant debt obligations to fund various construction projects, including a dental clinic, a school rehabilitation project and at least two senior housing projects.

Following the meeting on Dec. 7 the Attorney General’s office sent Costello a letter requesting a detailed plan for how the agency planned to navigate the next 30 days. The letter gave CAP until Dec. 12 to submit the plan, but according to court documents the letter failed to provide regulators any level of confidence the board could meet its obligation to ensure CAP’s financial viability.

The day after the deadline Blenkinsop filed an emergency petition in probate court.

It took Judge David King, sitting in Merrimack, one day to issue an order. He appointed Concord attorney Todd Fahey, of Orr and Reno, as special trustee, noting CAP did not object to the appointment.

Fahey will work with regulators, outside advisors, and management personnel to assess the agency’s financial situation and stabilize its operations. Higbee said on Monday staff are cooperating with Fahey, citing the organization tough straits.

Fahey, who specializes in New Hampshire non-profits, said the goal is to stabilize CAP and avoid any immediate interruptions in services. The staff of about 300 is still in place, he said, but he will be reviewing all programs in the coming weeks with an eye for making adjustments to help CAP fulfill its mission and operate in a fiscally sound manner. Eventually, Fahey said, he will withdraw as special trustee and a new board of directors will be put in place.

Neither Fahey nor Higbee would comment on whether Costello is still with the agency, but Blenkinsop indicated Costello has stepped down. The departure of the CEO and CFO were not tied to the court filings, he said. “That was nothing that we asked for.”

A call to Costello’s Conway residence was not returned earlier this week.

State regulators, meanwhile, may not be the only ones looking at CAP. Much of the organization’s support comes from federal grants, Blenkinsop said, so the federal government is also looking into CAP’s financing.

Fahey is required to file quarterly reports with the court, which will also be provided to Blenkinsop.

The next court date in the process is scheduled for 11 a.m. on Tuesday, Jan. 15, in Concord.

Valley News staff writer Sarah Brubeck contributed to this report.