A Community Pillar at a Crossroads

Northwest Montana United Way embroiled in litigation and allegations of mismanagement; former executive director makes first public comments since resignation in interview

By Myers Reece
United Way’s offices in the Gateway Community Center in Kalispell on Dec. 12, 2019. Hunter D’Antuono | Flathead Beacon

In Sherry Stevens’ 34 years as executive director of Northwest Montana United Way, an umbrella institution and nexus point for an expansive network of nonprofits, the charitable organization has raised millions of dollars for local agencies, facilitated untold additional grants, launched the ambitious Gateway Community Center project and nurtured a diverse array of programs. The broader influence of its role in buoying, aiding and connecting agencies makes it a critical cornerstone of the nonprofit sector.

Stevens is considered a foremost figure and trailblazer of the region’s human-services community dating back to the 1970s, enabling and supporting the establishment of numerous organizations that are now bedrock institutions in Northwest Montana. When the Kalispell Chamber of Commerce gave her the Great Chief Award in 2010, its highest honor, community leaders marveled at the scope of her influence, praising her selfless and tireless advocacy.

“(Stevens) has left many legacies, too numerous to recall or list,” Doug Rauthe, the former longtime director of Community Action Partnership of Northwest Montana (CAPNM) and Kalispell mayor from 1990-1998, wrote in supporting her nomination for the award, while describing her as “one of the longtime pillars of this community.”

But the latter stages of Stevens’ legacy have been complicated by controversy, as United Way under her watch has experienced deepening fiscal problems and been the subject of widespread allegations of mismanagement, as well as two lawsuits filed since last year and a formal complaint filed with United Way Worldwide by a former member agency over misallocation of funds. Tax records also raise questions.

Nonprofit leaders, including directors of United Way member agencies, cite a lack of transparency, financial mishandling, practices outside the norm for United Way nationally, and other concerns, caused or exacerbated by what they see as Stevens’ increasingly non-collaborative micromanagement leadership style that has cultivated a culture of retaliation and fiscal unrest. They say the issues have long been discussed amongst themselves but never aired publicly due to fear of retribution from Stevens.

Critics acknowledge that some issues have been unavoidable, tied to economic and cultural shifts, but interviews with a range of prominent human-service directors reveal a commonly held belief that the core problems are directly tied to Stevens.

Supporters counter that the allegations don’t mesh with the Stevens they have worked with and known for decades, and point to her long list of accomplishments. But one area of agreement among critics and supporters is that the turmoil shrouds United Way’s future in uncertainty, which could have ripple effects throughout an array of communities. The agency serves Flathead, Lake, Lincoln, Sanders and Glacier counties.

“We have partners primed for great things, revolutionary for our area, and I would hate for that momentum to be lost,” said Cassidy Kipp, deputy director with CAPNM, a major service provider across Flathead, Lincoln, Lake and Sanders counties. “We’re concerned about the service landscape moving forward.”

“I’d like to see United Way’s reputation be rebuilt,” added CAPNM Executive Director Tracy Diaz. “United Way should be a leader in the community.”

Rauthe, who worked with Stevens at CAPNM in the 1970s and then collaborated with her as both Kalispell mayor and a nonprofit director, said in a recent interview that he never saw any problems with Stevens’ leadership, although he acknowledges he’s been “out of the loop” for years.

“I always found Sherry was very concerned about the community and very engaged and on top of it,” Rauthe said. “She made a big difference in this community for decades and decades.”

“I would hope the community would continue to support United Way after all of this, because supporting United Way is supporting all the nonprofits that rely on that funding,” he added. “I’m worried about that.”

There are growing calls for a full forensic audit to determine whether the agency and Stevens have committed financial impropriety, including from Chany Ockert, a well-connected nonprofit consultant in the valley, who says she has long heard of instances where donations designated for specific agencies through United Way haven’t materialized.

“Over the years, various organizational leaders have shared with me that money they knew had been donated, when they talked with the United Way, that money was not in their accounts and Sherry told them that the money had never been received,” Ockert said. “From an oversight responsibility of the board, I believe it’s necessary for a forensic audit to be done in order to discover whether or not money has been misallocated or something else.”

Against this backdrop, Stevens announced her resignation in a paid advertisement on Dec. 1 in the Daily Inter Lake. In a Dec. 11 interview with the Beacon, she made her first public comments since stepping down. She was accompanied by her attorney, Bruce Fredrickson, and United Way’s attorney, Kim More. The attorneys, citing the potential to compromise ongoing litigation, directed Stevens not to answer most questions regarding operations or respond to any of the criticisms from nonprofit leaders.

However, in court filings, Fredrickson and More have disputed allegations brought forth by Two Bears Family Center, a number of which mirror the accusations from other agency representatives. The attorneys deny Two Bears’ assertions of breach of contract, wrongful termination, libel and slander, financial mismanagement and others that form the 15-count complaint.

Although she didn’t address the substance of the litigation or other allegations, Stevens, who had not previously stated a reason for leaving, did say the lawsuit and recent negative publicity contributed heavily to her decision. She said her “heart has grieved” over the publicity’s potential impacts on locals who rely on services, and added that it’s been harmful to her family.

“Do I want to resign? No,” Stevens said. “But I don’t want to bring any more negativity on United Way. I think it’s been greatly damaging. I feel like resigning is in the best interest of the community, United Way, programs and services and ultimately the clients.”

In addition to the lawsuit from Two Bears Family Center, a Whitefish man named Summerfield Baldridge sued Northwest Montana United Way last year, alleging breach of contract and fraud related to the 2015 purchase of the Gateway West Mall property, which United Way operates through an entity called Westside CCC as a nonprofit campus called Gateway Community Center. The agency had leased the former mall in Kalispell since 2009 before purchasing it, excluding the portion owned by the Flathead County Economic Development Authority that houses TTEC.

Baldridge set up a money-market account as collateral for the United Way’s $2.3 million purchase of the property and said in his lawsuit that the account was intended to be used as collateral for two years and then released back to him, with the return of security interest and interest owed. The complaint stated that the security interest had not been returned and interest owed had not been paid to Baldridge within two years.

The lawsuit was settled, the terms of which weren’t made publicly available.

Also, Sparrow’s Nest of Northwest Montana, for which the local United Way served as fiscal agent until March 2016, filed a complaint over misallocation of funds with United Way Worldwide. The nonprofit received confirmation that the complaint was received but nothing more, according to outgoing Executive Director Jerramy Dear-Ruel.

Nonprofit leaders say the post-resignation transition process has been opaque, and because Stevens has retained a role as a consultant to assist with the succession, they worry that her resignation hasn’t resolved the problems and has raised even more questions regarding her involvement. Stevens registered a private consultancy business, Living Hope Consulting Services LLC, three days before her resignation took effect.

“We’re all just very hopeful that the outcome of this will be positive, but for that to happen, the break has to happen,” Hilary Shaw, executive director of the Abbie Shelter, said. “That can’t happen with Sherry as a consultant.”

“This crisis that’s happening, the hope is that maybe the United Way will become a well-functioning agency,” she added. “Abbie Shelter would benefit from a true functioning collaboration.”

One of the primary functions of United Way across the nation is raising funds for nonprofits under its umbrella. The agency traditionally receives a significant chunk of its revenue from a workplace contribution program, in which employees at participating businesses have the option to set aside a percentage of their paychecks as a donation to the organization. United Way distributes the funds to affiliated agencies annually.

Stevens says workplace contributions have been declining as major employers close or leave the valley. She said the shuttering of Columbia Falls Aluminum Company, for instance, devastated contribution totals. Stevens also notes there’s more competition for giving, including online or through local foundations, which have expanded their footprint over the years. Corporations that have switched to third-party processors have also impacted giving, she said.

But even if changes to the charity landscape have reduced donations, the percentage of contribution and grant revenue paid out to agencies has disproportionately declined in recent years and is significantly lower than at other United Way branches in Montana, according to a review of 990 tax records.

While United Way branches are often structured differently, which can affect tax information and the ways in which expenses are documented, nonprofit representatives say the local agency’s 990s are composed in a way that makes it impossible to know how all of its money is spent.

For one, other Montana branches provide detailed breakdowns of funding assistance to specific agencies, while the local agency only lists lump-sum distributions from its giving campaign without listing individual recipients.

“During the United Way giving campaign, donors are generous in order to support the nonprofits in our community,” Ockert said. “It’s important that those donors know how those funds are being used and whether or not they are being used to support the nonprofits.”

Local member agencies are reporting that they haven’t received a single dollar from the giving campaign in 2019, which they say is unprecedented. Nor have they been told what has happened with that money either. Moreover, they say Stevens canceled the annual citizen advisory panel this year, which is the primary mechanism for agencies to present their funding needs, casting doubt over 2020 funds as well.

According to a 2017 Beacon story, Flathead Food Bank used to receive more than $40,000 a year from the United Way, peaking at $55,000 in 2007. Jamie Quinn, executive director of Flathead Food Bank, said numbers have been a fraction of that in recent years. The food bank was approved for $10,000 in 2019 but hasn’t received any funds.

Shaw, with the Abbie Shelter, described a similar decline in United Way funding, culminating in zero dollars this year.

“Everybody is afraid to ask about it because Sherry tends to do behaviors that are vindictive,” Shaw said. “Everybody has been harboring this frustration, this sense of voicelessness with Sherry. Finally some people see some accountability coming, hopefully.”

In response to a question about the status of those allocations, More, United Way’s attorney, said the “2019 giving campaign has not concluded.”

“The United Way is continuing to work with its member agencies to address their needs and how the United Way can assist,” More said.

Additionally, Northwest Montana United Way reported in its tax records spending $346,034 and $466,539 on “occupancy” expenses in 2015 and 2016, respectively, huge spikes for that category that coincide with the first two years of owning the Gateway Community Center, which is supposed to maintain separate finances and files its own 990s under Westside CCC.

Agency directors and others have long voiced concern over the Gateway Community Center’s impact on United Way’s finances and ability to perform its broader functions. It’s a large undertaking, and nonprofit employees have noted the unmaintained parking lot and building exterior.

In a 2018 Daily Inter Lake story, Flathead County Commissioner Phil Mitchell said, “We’re concerned about how Gateway Community Center is being managed with all the partners involved.” In the same article, United Way board member Jim Oliverson assured there was “no co-mingling of funds” between Westside CCC and United Way.

Carol Nelson, United Way’s board chair, recently gave a tour of the center, accompanied by attorneys Fredrickson and More, and spoke enthusiastically about the project’s success and future, while acknowledging maintenance needs outside and a few still-unrealized undertakings inside. Nelson also conceded that running United Way and the Gateway Community Center was likely too tall of a task for Stevens, and said the board plans to hire a property manager moving forward.

“It was too much to ask of Sherry,” Nelson said. “Thank goodness for her. I’m really grateful for everything she did. We couldn’t have done it without her.”

Questions have also been raised over other financial matters, particularly transparency. Nonprofit leaders say upon request Stevens has not provided basic financial information, which is one of the grievances listed in the lawsuit by Two Bears Family Center. Nor does the local United Way post its 990 tax records and board of director information on its website as is the norm at other agency branches. Agency employees also say board members aren’t made available for questions either.

Furthermore, Northwest Montana United Way is responsible for conducting the annual “point-in-time” homeless population counts, which form the basis for critical funding applications through the Housing and Urban Development (HUD) program. Diaz from CAPNM says the local counts are completed neither properly nor in a timely fashion.

Diaz also said agencies like hers should be able to apply for funds through the Emergency Food and Shelter Program (EFSP) in a public process. But Diaz said United Way keeps the process secretive, to the point where agencies don’t even know how to apply, which Diaz hasn’t encountered elsewhere in the country in her nonprofit career.

“It’s not done the way here that it’s done anyplace else,” Diaz said.

When Diaz first started her job at CAPNM several years ago, she said she repeatedly asked Stevens how to apply for the funding and couldn’t get an answer for two years. She said Stevens finally told her the money had already been allocated to other agencies. Diaz brought her concerns to United Way Worldwide but never received a response, and said the EFSP process has remained guarded.

“United Way is supposed to be a public agency,” Diaz said.

Beyond finances, agency directors say day-to-day operations are also confounding, such as United Way frequently locking the doors to its offices without explanation during business hours, and nobody available over the phone to speak to people seeking routine agency services such as gas cards to travel to work, housing and job assistance, and general questions.

“We get a lot of customer complaints about calling multiple times and nobody returning calls, sitting outside for hours because the doors are locked,” Quinn with the food bank said.

United Way’s attorney said the “office is open during business to the extent it is able to, given its resources.”

One popular program for which United Way served as fiscal agent until recently is reorganizing. Neighbors in Need is a coalition of 28 local congregations that pool donated funds to serve as a “last-resort” option for people in need. Dan Heskett, a pastor at Northridge Lutheran Church, said Neighbors in Need “is in the process of formally separating any formal association with United Way.”

“We’re revisiting our mission and going through a re-visioning process that is kind of spurred by this change of leadership,” he said.

Heskett notes that Neighbors in Need has operated as an independent Christian ministry, with United Way as fiscal agent providing bookkeeping and accounting services but no financial backing. The faith-based program’s revenue is derived from donations at participating churches and from individuals and fundraisers. But Heskett acknowledges public confusion about the relationship, particularly with Stevens sitting on the board.

“That’s why we’re fairly excited to claim our own identity again,” he said.

United Way has also been an important referral source for the ministry, which Heskett says serves people who haven’t been able to obtain services through other agencies.

“We’re definitely going to reevaluate how we do referrals,” he said. “I don’t know what that will look like in the future.”

Additionally, Neighbors in Need has been constructing a homeless day shelter in Gateway Community Center that is now facing an unsure future.

“The one thing that’s uncertain is that space that we have slowly been building to be an adequate facility,” Heskett said. “My understanding is that United Way is not certain what will happen with that space.”

But Nelson said United Way, even with Neighbors in Need dissolving its relationship with the agency, still plans to finish the day shelter, although she acknowledged that the project ran out of money in part due to unforeseen plumbing issues.

Meanwhile, Stevens said she would like to stay involved in the type of work she has dedicated her life to, although she doesn’t anticipate a job opening on the table locally after recent events.

“Hopefully I can volunteer,” she said. “I’ve been blessed to have worked at United Way for 34 years. We have amazing community members who have given from their heart. I’m very thankful.”