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Library foundation dispute comes to light

December 04, 1999

Noaki Schwartz

NEWPORT BEACH -- Six weeks after library trustees threatened to fire

their fund-raising arm, leaders on both sides are saying detente is

almost at hand.

In October, the library Board of Trustees sent a forceful letter

threatening to sever its relationship with the Library Foundation because

of differences over finances and control, even threatening to banish the

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nonprofit group from library premises.

Since then, the two parties have held marathon meetings to come to some

sort of resolution. And they have made a significant amount of progress,

said City Manager Homer Bludau, who has been mediating the weekly

summits.

"Right now, drafts of an agreement are being worked on," said David

Carmichael, foundation president. "It's a series of guideposts on how

we're really going to enhance communications to avoid problems like this

in the future."

Despite the pending peace agreement, the spat -- which has pitted two of

Newport's most respected organizations against each other -- has rocked

the usually tranquil library establishment.

The Oct. 19 letter demanded the foundation reduce its operating costs,

regularly give clear financial reports to the trustees and give greater

control of the foundation operations to the city and library board.

If the foundation did not comply with the trustees' requests, the board

threatened to dissolve its relationship with the foundation. That would

require the foundation to cease fund raising in the name of the library

and "begin the process of vacating the library premises."

For almost six weeks, both groups have remained tight-lipped about the

details of the disagreement, only saying that nothing illegal has

transpired. An audit conducted on the foundation in September found the

foundation's finances to be in order.

One of the major issues appears to be whether the foundation should build

up its endowment fund or use donations to meet more immediate needs at

the library. Since its inception five years ago, the foundation has given

about $574,000 directly to the library and has established an endowment

fund of nearly $1 million.

In the foundation's current budget, most of the money raised for the

high-profile Campaign 2000 effort has been marked to build up the

endowment fund. Of the $1.6 million expected in donations this year,

about $1.3 million would go to the endowment fund, $83,500 to the library

and the rest to operate the foundation.

Another issue for trustees is what they call an increasing percentage of

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