Nashville to take new approach to nonprofit partnership in disaster response after audit

Cassandra Stephenson, Nashville Tennessean
·5 min read

Nashville's new approach to partnering with nonprofits to collect and distribute donations after disasters is being put to the test before the ink on a new agreement is dry.

Less than 48 hours after tornadoes devastated swathes of Middle Tennessee, Metro officials and auditors packed into a small room in the Metro Courthouse to discuss the findings of an audit examining the Community Foundation of Middle Tennessee's most recent disaster response efforts.

The foundation has served as Metro's partner organization for managing direct monetary donations in the wake of disasters since 2012, when Metro and the Community Foundation signed a memorandum of understanding solidifying their relationship. When called on by Metro's Office of Emergency Management, the foundation becomes responsible for soliciting and distributing donated money to local disaster victims.

Since 2020, the Community Foundation has distributed more than $8.8 million in disaster response money, including:

  • $7.7 million to 98 organizations following the 2020 tornadoes

  • $699,000 to six organizations following the 2020 bombing

  • $1.2 million to 14 organizations following the 2021 floods

While the money collected by the foundation is not Metro funding, Metro officials direct those who wish to make donations to the Community Foundation. The memorandum of understanding is meant to ensure transparency and accountability, but the audit determined the agreement was often unspecific and the foundation's process for distributing funds after the 2020 tornadoes lacked proper accountability measures.

Council member Courtney Johnston called for an audit of the foundation last year, unsatisfied with its methods for distributing donations after the 2021 floods, which impacted Johnston's constituents. Johnston wanted the audit to show where and how money was spent. The Metro Audit Committee agreed and selected third-party consultant BerryDunn — with whom Metro has an existing consulting contract — to perform the audit.

The audit was intended to examine the foundation's reception and distribution of funds following three disasters: the 2020 tornadoes, the 2020 Christmas bombing and widespread flooding in 2021. Ultimately, auditors excluded the bombing and flooding from the audit's scope because it was unclear whether Metro officially activated the foundation's services following each event.

The audit's examination of the 2020 tornado response showed a lack of common understanding about how to distribute funding if damage spans multiple counties. Use of the Metro Nashville Disaster Response Fund is intended to be limited to Davidson County, so the foundation used its Middle Tennessee Emergency Response Fund instead, handing decision-making reins to that fund's committee and effectively cutting the Metro Nashville Disaster Response Fund committee out of those conversations. The foundation generally distributed funds based on need, the report states, but did not have grant award agreements with the recipients and did not provide accounting or auditing guidelines.

While Metro officials agreed the finished audit did not deliver what they requested, the results were published anyway. The report's recommendations can be used to improve future memorandums of understanding with the Community Foundation and other organizations, officials said.

Those recommendations include:

  • Clarify how Metro activates the responsibilities of the Community Foundation of Middle Tennessee

  • Clarify what happens when a disaster impacts multiple counties, how the Metro Nashville Disaster Response Fund is to be used and how Metro is engaged in those decisions

  • Specify accounting and auditing guidelines, and performance metrics for tracking how grant money is spent

  • Establish monitoring procedures including progress reports, regular meetings and regular compliance reviews

  • The foundation should train staff and develop procedures to ensure it can take on responsibilities and maintain accountability in the case of a disaster

Community Foundation: Recommendations already being pursued

At Monday's audit committee meeting, Community Foundation CEO Hal Cato, who took the helm of the nonprofit about a year ago, said strengthening its relationship with Metro is a priority. The Foundation has agreed to pay for the audit and accepts the final report's recommendations.

Those recommendations are already being put in place, Cato said, noting that the both the Community Foundation and United Way are collecting donations for survivors of Saturday's tornado with two ways to give: to those inside Davidson County borders and those in other counties. United Way will be responsible for making grants in Davidson County, he said.

Cato also offered to share documentation of "every dollar that went out the door (and) when" for the 2020 bombing and 2021 flood, though the audit did not examine these documents. Once the foundation makes grants, it doesn't audit grantees, he added.

The Community Foundation also announced the appointment of James C. Munch as the organization's new chief financial officer Monday. Munch previously served Fortune 500 companies and the National Museum of African American Music and managed a more than $100 million portfolio for the Community Foundation of Northern Illinois.

Johnston will present a fresh draft of a new memorandum of understanding to Metro Council in January.

"Unfortunately, we've had a disaster so soon before the ink could really dry on the draft," she said Monday. "But I think … they all felt so comfortable with it that they're actually operating underneath that MOU that has not actually even been signed yet."

Johnston said she feels the new agreement is the "best path forward to take advantage of each individual's strengths and how we come together and work for a common goal so we can respond to the people that need our help as efficiently and effectively as we possibly can."

Metro Finance Director Kevin Crumbo said the new agreement will need to be updated continuously to serve Nashville's changing needs.

"We've got an emergency management arrangement that dates back more than a decade that has these provisions in it, and we were a much smaller city and frankly, less capable city when it came to our emergency response at that time," he said. Recent disasters showed that arrangement is "stale."

Crumbo said he personally contributed to the Community Foundation to test its new process.

"I have every confidence in the world in Mr. Cato's leadership," Crumbo said. "His board has been magnificent working with me in the background, and I'm very confident we'll get to an arrangement that will last us."

This article originally appeared on Nashville Tennessean: Community Foundation improves Nashville disaster response after audit