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San Diego Pride Executive Director terminated after uncovering misuse of charitable funds by the Board of Directors

On October 6, 2009, San Diego Pride Executive Director Ron deHarte received an email informing him that the San Diego Pride Board of Directors had voted to approve a $5,000 payment to Board Chair Dr. Philip Princetta, for his seven years of service to the organization.

“I was sick to my stomach when I read that email,” said deHarte. “I was sick to think that a Board could take that kind of action without consulting with the Executive Director.”

A payment to a board member is expressly prohibited in a paragraph located in the organization’s bylaws. The language is clear and simple: board members are not to be compensated.

deHarte was shocked by the decision.

“Even if someone wanted to construe in their minds that it was okay to do this- the decision to make a payment of this nature, which is highly unorthodox, this process should have taken place in the public realm. [The Board] should have had a third party come in to do an assessment on the value of the Chair’s time and how much compensation should be paid. There would have been a right way to do this. Making this type of decision via secret meeting, which excluded the Executive Director, was not the way to go about this.”

The cutting of that check marked the first time in the history of San Diego Pride that a board member had been compensated for their time. deHarte also understands this to be the first payment of its kind to a board member for a nonprofit organization in San Diego.

“I couldn’t believe we were going to pay someone who had served in a volunteer capacity from 2002 to 2009,” he added. “There was no contract for performance, verbal or written. There was no agreement to say we’re going to pay Princetta for his service to the organization. It just appears that an arbitrary decision was made to pay this guy- and it just smells bad.”

deHarte’s objections to the “one-time payment” stacked high. There was no documentation. Other nonprofit boards had not been looked at. Best practices were not looked into. All of these things, he felt, should have been done prior to awarding the Chair the $5,000 check. Although he remained highly skeptical of the decision- deHarte felt it best to wait and see what the minutes from October’s meeting reflected. But the information wasn’t there.

Nor was it available in November.

It wasn’t until two months later that the decision to compensate Princetta was documented. However, the only information that became available to the public record then, was that the Board had voted in an email communication to approve Princetta receive the $5,000 payment as “a stipend for his service to the organization since 2002.”

deHarte was appalled. 12 hours later, he met with Board Treasurer Mike Karim to voice his concerns.

“I wanted to let him know that this was wrong on every level imaginable, not counting that this was a flagrant misuse of charitable funds. The violation of public trust would impact the organization forever. I told [Mike] we needed to act immediately. We needed to call for the resignation of the Chair and we needed to request the money be returned to Pride.”

He readdressed the same concerns with Princetta three hours later.

“I tried to compel him to understand that not only had we violated public trust, but we were showing an inability to manage the organization in the best interests of the organization and the community as a whole. I told him he needed to resign. All he told me was that he’d consider my request and he’d get back to me.”

12 days later, on December 29, de Harte received an email saying that although his request had been considered, the Board had reaffirmed Princetta’s position as Chair. He would not be tendering his resignation and he would not be returning the money to Pride.

Concerned, deHarte filed a complaint under the whistleblower policy of the organization, as a means of protecting himself against retaliatory behavior by the Board for having raised issue with their decisions. It was only after this that he decided to make one final request to the Board, asking them to do the right thing.

“I feel the Board has not acted in the best interests of San Diego Pride or the community. The loss of public trust will challenge this organization for the foreseeable future,” wrote deHarte in a January 4 email.

“The Board had the right, duty, and privilege of time, to seek and receive advice and opinions from the Pride organization’s Executive Director, legal advisor, accountant, and other nonprofit leaders in San Diego. The board violated their ‘duty of care’ to the organization. The board has violated the duty of ‘good faith’ by privately discussing compensation and not allowing sufficient time for discussion and deliberation at board meetings. It saddens me to be in the position to now call on the resignation of all three board members and request the $5,000 be returned to San Diego Pride immediately.”

Today, Ron deHarte was fired.

“We removed Ron due to a difference of opinion as to how the organization should be run, and the disparity between the organization and the Executive Director as to how the organization is being handled,” said Princetta.

“Ron has done a very good job with San Diego Pride- he had done a great job with moving the organization forward and training the staff to carry the ball with this organization. If there was a problem that existed within the organization, it existed between the Board of Directors, past and present, and the Executive Director, regarding communication of information between those two divisions: the operations division and the Board’s division. We felt at times there wasn’t enough transparency between the operations and the Board.”

When asked if he could provide a specific example as to a breakdown of transparency, Princetta said he was unable to do so. “Not off the top of my head.

“But there has been a disparity between Ron and the Board since he was hired. His termination today has nothing to do with his bringing issue with this payment. It’s a completely separate issue.”

Anne Hewett, former San Diego Pride Board Co-chair, disagrees.

“I think that Ron was transparent and made sure that the finances and the budget were transparent to everyone and that everyone understood it. I think that Ron has reached out to the community, to get input and to get the community interaction that we haven’t seen in a very long time,” said Hewett.

“Ron has built bridges across many organizations, with civic leaders also, to really get Pride back in good standing. In my opinion and experience, I’ve never felt Ron had hidden anything from me or the Board while I was Co-Chair.

“I think that the decision to let him go is a detriment to the organization. It is appalling, what happened," continued Hewett. "The focus is not Ron’s past or what he’s done in the past. I think what this situation is, is that Ron disagreed with the Board of Directors and misusing funds of this organization. And that’s really the key of what has gone on. And I think that’s what angers me the most. A gross misuse of community funds is what it comes down to. That’s what the focus is and what it needs to be.”

Princetta maintains his justification in receiving the payment, citing his longstanding tenure with Pride and the long hours he put in, to make the organization flourish.

“I felt the one-time compensation would be appropriate, as did the board, which is why they waived the bylaws. The disclosure was made fully in October’s meeting minutes. The Board’s intentions were pure.”

SDGLN called San Diego Pride’s Director of Development, Ken St. Pierre, to request a copy of October’s meeting minutes. St. Pierre indicated October’s meeting minutes seemed to be missing from the office. Unhappy with the turn of events, the actions of the Board, and the decision to make payment to Princetta, St. Pierre tendered his resignation.

“Effective immediately, I am resigning my position as Director of Development of San Diego Pride. It is my belief that the payment of $5,000 to the chairperson of this organization, Dr. Philip Princetta, is highly unethical. As a result, I have lost confidence in the current Board of Directors,” St. Pierre wrote in an email earlier today.

"In my role at Pride as Director of Development, I am responsible for the fundraising efforts of this organization. Formerly, when I would ask individuals to open their wallets and dig deep to support Pride, I could say with the utmost confidence, that these funds were being used honorably and in accordance with the mission statement of San Diego Pride, which is to foster pride in and respect for, all LGBT communities, both locally and globally. Now, I can no longer fulfill my duties because I no longer believe that the funds I raise for this organization are being used to fulfill its mission."

Minutes later, San Diego Pride’s Production Assistant, Jeffrey Redondo, followed suit.

"As a member of the staff of San Diego Pride I am very disappointed about the decision by the Board to pay the Chair a $5K gift for his "involvement and leadership" in Pride, in addition to firing the Executive Director for his objection to the gift,” he wrote. “As with most, if not all, nonprofit organizations, the Board is asked to help to raise money for the organization and does not receive funds for their service.

“I find it very difficult to work for any Board that does not bring in money to the organization, while paying the Chair funds that should be donated back to the community, therefore, I hereby resign from my position, effective immediately.”

Hewett feels the only remedy to the situation would be the resignation of the Board itself.

“I think at this stage, because of how this was handled, the only solution is for the Board to resign. They’ve misused community funds. It’s that simple.”