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Congressional Award Foundation in Financial Peril

The Congressional Award Foundation faces a questionable future after failing to pull itself out of a spiraling two-year financial downfall, according to a financial audit recently released by the General Accounting Office.

The foundation, a nonprofit, private-public partnership created by Congress in 1979 to honor youth achievement, receives no federal funding, relying on private fundraising and the Congressional Award Trust for its financing.

The GAO report, released May 15, states the foundation’s net assets dropped from $990,800 at the start of fiscal 2001 to only $216,112 at the end of September 2002. The losses totaled $330,726 in fiscal 2002 and $443,962 in fiscal 2001.

“While the Foundation is taking steps to decrease its expenditures, those steps may not be sufficient to allow it to continue operations,” the report states. “Unaudited financial data compiled by the Foundation as of March 31, 2003 showed that the Foundation’s financial condition has not improved, thus raising substantial doubt about the Foundation’s ability to continue as a going concern.”

Among the largest drains on the foundation’s assets was the loss of $100,000 from its permanent trust fund “due to adverse market conditions,” the report states.

Although prohibited from receiving federal funds, William Kelley, the foundation’s national director and chief executive officer, said the group could seek Members’ help in making fundraising calls or appropriating funds to other federal agencies that could share money with the foundation.

“GAO, I think, may have done us a great service by calling attention to, in such a clear way, our financial straits,” Kelley said. “Now the issue will come before Members of Congress and they’ll make a decision about how they want to support the award.”

Sen. Larry Craig (R-Idaho), a member of the Congressional Award Board, is participating in ongoing discussions about the foundation’s future, said Craig spokesman Will Hart.

“We want to make sure we don’t lose this program,” Hart noted.

One of two awards authorized by Congress (the other is the Medal of Honor), the Congressional Award is presented to youths between the ages of 14 and 23 who complete requirements in four areas: volunteer public service, personal development, physical fitness and expedition/exploration.

Kelley blames the foundation’s financial outlook, in part, on a drop in charitable giving following the Sept. 11, 2001, terrorist attacks.

“We’re enrolling and engaging young people … but financially, a number of things have conspired against us,” he said.

Participation in the program has nearly doubled, from 6,077 participants in 2000 to 11,056 in fiscal 2002, though Kelly notes that costs for the program have dropped from $102 per person to $63 per person, within the same time span.

“We have more young people being served at less cost per person,” but increased interest has resulted in additional costs for printed materials and staff, Kelley said. “We can’t achieve it at this rate, we need help.”

To deal with the financial shortfalls, the foundation’s board approved the use of $130,000 in dividends from its trust fund to cover operational costs in fiscal 2002, and also obtained a $100,000 loan.

In October 2002 Kelley paid $1,280 to cover the costs of an answering service used by the foundation, and in November 2002 loaned the foundation an additional $4,041 to furnish a reception and dinner for program donors in London.

Additionally, Kelley, along with the foundation’s finance director and development director, used personal credit cards to pay for nearly $39,077 in fees related to the foundation’s 9th Annual Congressional Awards Gala in June 2002.

Although most of those funds have been repaid, Kelley said the foundation still owes approximately $6,000 to himself and Finance Director Bob Clements.

“We did that not expecting to have to carry it as long as we have,” Kelley said of the payments for the 2002 gala.

The foundation has dropped plans for similar events in the near future, Kelley said, and has cut back the awards program for recipients of the Gold Medal, the highest achievement level of the Congressional Award program.

Winners of the Gold Medal typically spend several days in Washington, visiting the Capitol, Supreme Court and other Capitol Hill locales, but this year will only be offered an award ceremony.

“They had looked so much forward to coming to Washington for this four-day event and then I canceled it. I had no choice,” Kelly said.

The foundation’s authorization expires in September 2004, but Kelley said he does not expect the current financial difficulties to prevent Congress from reauthorizing the program.

“I think Congress will certainly look at the fact that we have over 13,000 young Americans enrolled in the program,” Kelley said.

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