The Multicultural Chamber of Commerce went in the hole for tens of thousands of dollars over a five-year-period, a city review states. The total negative equity was:
• 2005: $48,418
• 2006: $71,871
• 2007: $80,277
• 2008: $131,761
• 2009: $191,382
Chattanooga and Hamilton County taxpayers have given the Tennessee Multicultural Chamber of Commerce $2.3 million since its inception in 1999.
• Hamilton County: $802,500
• City of Chattanooga: $1,510,000
Source: Chattanooga, Hamilton County
The Tennessee Multicultural Chamber of Commerce fell into a financial hole six years ago that has only grown deeper since then, a city review shows.
In 2005, the Multicultural Chamber’s unrestricted assets exceeded its liabilities by $48,418, City Auditor Stan Sewell’s July 12 review states.
By 2009 that figure had grown to $191,382 — a 295 percent increase, the review shows.
During the same time period, the chamber’s line of credit increased from $42,741 to $96,294, records show.
“A review of income for the five-year period does not reveal any trend of increasing revenue,” Sewell wrote. “As noted above, the organization is consistently running losses from year to year.”
The Tennessee Multicultural Chamber of Commerce is now under investigation by the FBI and the U.S. Department of Housing and Urban Development. The organization has been under fire for more than a week after Sewell’s review described possible financial mismanagement, questionable loan and land deals and extravagant salaries and travel expenses.
The review was spurred after a Chattanooga Times Free Press investigation showed discrepancies in the Chamber’s budget requests to Chattanooga and Hamilton County.
Executive Director Sherrie Gilchrist did not respond to requests for comment Thursday or Friday.
Multicultural Chamber board member Jerry Hanner Sr., owner of Hanner Construction Co., said a lot of the chamber’s financial woes were caused by the recession.
“A lot of people got hit, but that doesn’t mean that the Chamber has done anything wrong,” he said.
Sheila Moore, executive director for the United Way’s Center for Nonprofits, said Friday that it’s not the norm for a nonprofit to run up negative equity.
Moore said she couldn’t speak specifically about the Multicultural Chamber, which hasn’t been a client or member of the Center for Nonprofits.
But she said nonprofits run on “shoestring budgets” and try to put most of their available money into running programs.
“Generally, we don’t see a lot of debt in the nonprofit community,” she said.
The Times Free Press investigation show the chamber budgeted more than $350,000 a year to run an office and pay employees and less than $35,000 a year on programs.
City and county figures show that local taxpayers gave the chamber $1.1 million between 2005 and 2009.
Still, Sewell’s review showed the Chamber’s financial health continuing to worsen. In 2008, the chamber borrowed $574,000 to buy two properties along M.L. King Boulevard for a Business Solutions Center, further putting itself in the hole.
The most recent financial records that can be viewed by the public — 990 forms nonprofits file with the IRS — for the Tennessee Multicultural Chamber of Commerce are for fiscal year 2009.
The city review also states that in two of the five years the Chamber’s bank account was overdrawn on the last day of the year.
“It is likely such overdrafts have been common,” Sewell wrote.
But even as the Multicultural Chamber kept getting deeper and deeper into the hole, there is no record its director or board sought financial help or counseling from outside agencies.
Moore said her organization hosted 76 workshops and events last year that provide training on a variety of subjects such as nonprofit board development, finance and administration and nonprofit evaluation. She said the organization also provides client-specific consulting and training.
She said she has no record the Chamber ever came to the Center for Nonprofit Assistance for help, but added that doesn’t mean it did not.
“In my three years, I haven’t been engaged with them,” she said.