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Thursday, 05 October 2017 16:16

Lawsuit alleges Grand Rapids Art Museum misused donor-restricted funds

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Lawsuit alleges Grand Rapids Art Museum misused donor-restricted funds MIBIZ FILE COURTESY IMAGE

GRAND RAPIDS — The former COO of the Grand Rapids Art Museum (GRAM) has filed a whistleblower protection lawsuit against his former employer, alleging widespread misuse of donor-restricted funds.

D. Neal Bremer, a Kalamazoo resident who worked as COO of the GRAM from June 2015 until his termination on June 28 of this year, claims that museum executives regularly misused donor-restricted funds on other expenses, “including general operations expenses,” according to the lawsuit filed on Sept. 22 in the 17th Circuit Court for Kent County. Donor-restricted funds are earmarked to a nonprofit for purposes specified by the donor.

In the court documents, Bremer alleges that shortly after beginning his employment, it became “obvious” that funds were being misused and that the museum “was essentially borrowing excessive amounts from temporarily restricted funds to pay for unrestricted expenses.” Bremer claims that even after informing GRAM CEO Dana Friis-Hansen and Human Resources Director Maria Davis about the issues, they took no “corrective action.”

“When a nonprofit that relies extensively on donations from the community acts in a cavalier fashion with its entrusted funds, this undermines the trust donors have for all nonprofits,” Bremer said in a statement released by Howard Law Group, the Grand Rapids-based law firm representing him.

For its part, the GRAM denies the allegations, but declined to discuss specific details laid out in court documents.

“(W)e fully reject the accusations cited in the complaint and have strong documentation to refute the complaint,” according to a statement provided to MiBiz by a spokesman. “The allegations have no merit whatsoever and GRAM’s actions have at all times been entirely lawful and appropriate. We have every confidence that our rationale for dismissal of this matter will be confirmed through legal channels.”

It was unclear as this report was published whether attorneys representing GRAM had made a motion to dismiss the lawsuit.

Bremer was a veteran nonprofit executive who previously served as executive director of the Arts Council of Greater Kalamazoo. He said he was hired largely to run day-to-day operations of the museum, rather than act as a financial officer.

However, by the 2015-2016 fiscal year, the museum’s budget had grown to $5.8 million, far above the nonprofit’s revenues at the time, according to court documents, which note that Hansen had a stated goal of raising the annual budget to $7.5 million.

In the court documents, Bremer cites various issues of concern, including prepaid expenses disappearing from the Statement of Activities (the nonprofit version of an income statement) and funds being recategorized. Additionally, numerous unplanned expenses are alleged to have stemmed from the hiring of consultants, exhibition costs and higher-than-planned CEO travel.

Read 7054 times Last modified on Thursday, 05 October 2017 16:33
Nick Manes

Staff writer

nmanes@mibiz.com

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