What Is The Headwaters Foundation And Why Does It Matter?

by William Skink

“Yes, the long memory is the most radical idea in this country. It is the loss of that long memory which deprives our people of that connective flow of thoughts and events that clarifies our vision, not of where we’re going, but where we want to go.”

-Utah Phillips

I was thinking about this quote yesterday as I read about a new 16.7 million dollar initiative to help young children, announced yesterday by the Headwaters Foundation.

What is the Headwaters Foundation? Good question. According to the Missoulian article:

Headwaters Foundation was created and funded by the sale of the nonprofit Community Medical Center hospital to a for-profit partnership. Because federal law requires the transfer of a nonprofit’s assets to another tax-exempt organization when it is dissolved, the Headwaters Foundation was created and must have a similar mission of improving health and lives in western Montana.

The foundation has an endowment of $100 million, and the Internal Revenue Service says it must distribute roughly 5 percent of its endowment every year.

The sale of Community Medical Center was a big deal when it happened 4 years ago. This is where memory comes in handy. I remember there being lots of concern and controversy over this sale because an immediate cash handout to the University of Montana was attempted, then rescinded. This article doesn’t go into the accusations of conflicts of interest that caused the original proposal to be withdrawn, instead leaving it to this simple statement:

Community Medical Center withdrew its original proposal for the money, which would have distributed $10.5 million to the University of Montana Foundation to help create a new health care complex at the Skaggs Building on campus.

When the sale was finally completed for 74 million dollars–money that is required by law to benefit the public within Community Medical Center’s geographic service area–the non-profit that spun off became one of the largest non-profit foundations in Montana history. It was called the Legacy Foundation. Then I didn’t hear about this giant pool of money until yesterday.

I never forgot that money was out there. When I was still working at the shelter I would bring up this sale and ask about getting funding for a wet shelter or some other type of facility. No one seemed to know what was happening with our millions and millions of dollars.

That 74 million dollars somehow became 100 million dollars, and the Legacy Foundation somehow became the Headwaters Foundation. How in the hell did that happen?

Amidst serious budget cuts and tax increases and Missoula’s persistent inability to address gaps in services that can become lethal when the temperature drops, 16.7 million could go a long way. Instead, it’s going to allegedly help young children. From that first link:

The new Zero to Five program office at UM will bring together three organizations: the UM Center for Children, Families and Workforce Development, Healthy Mothers, Healthy Babies and the Childwise Institute. Funded programs will address one of three specific areas for children ages 0-5: resilient parenting, healthy pregnancy and school readiness.

“In the early childhood space in Montana, everyone tells us that they lacked the resources to move the needle on certain things,” Solorzano said. “This kind of investment will help them get over the hump.”

Solarzano knows kids that young aren’t going to be voters or taxpayers anytime soon, and so that population might be neglected in terms of local, state and federal funding. The Headwaters Foundation, she said, has a board of directors that understands that the impacts of its assistance might not be tangible for a long time.

So it looks like UM finally did get to reap some benefit from the sale of Community Medical Center. Even better, who can argue about helping young children? And that last sentence about the impacts not being tangible for a long time, this is how I read it: “hey, we’re not going to be able to show any results from this giant infusion of funds for awhile, so don’t expect any”. Anyone who works getting grant money knows the reporting requirements and level of accountability is usually very, very high. That doesn’t seem to be the case here.

For specifics on why the opponents of this sale of a public asset were so concerned 4 years ago, here is a detailed list of unanswered questions published in the Montanan Standard:

1. Citizens of Missoula, who have contributed millions of dollars to support the building and success of CMC, deserve input into the decision. Secrecy has surrounded the entire decision-making process of the CMC board.

2) The $67 million paid for CMC, the $40 million guaranteed for recruiting 40 new physicians (impact on current physicians unspecified), plus a profit, will be recovered by the for-profit RegionalCare Hospital Partners by limiting medical care for the citizens of western Montana.

Did due diligence by the CMC board compare the impact on physicians, staff and patients when converting from a non-profit to a for-profit facility?

3. The Fort Missoula property that was sold to CMC was given to Missoula County by the federal government under the Surplus Property Act of 1944, Public Law 479, Sec. 13, which states in part: ” Surplus… property suitable for use in the protection of public health… may be sold or leased to the States and their political subdivisions… and to hospitals… not operated for profit. Surplus property shall be disposed of so as to afford public and governmental institutions … non-profit or tax-supported hospitals and similar institutions… to fulfill, in the public interest, their legitimate needs.” These conditions have not been rescinded, and we believe they still apply to the property. The Missoulian acknowledged restrictive covenants to be “schools, churches, hospitals,” all non-profit entities.

4. The original Missoula Community Hospital Articles of Incorporation of 1976 state, in part: “Art.3B: to be organized exclusively… as a non-profit corporation… no part of its profits or net earnings or dividends will inure to the benefit of any member, director, trustee, officer or any other person or corporation… ; Art 8. Dissolution … Upon dissolution of this corporation, all of the corporation’s assets remaining after the payment of all its liabilities shall be transferred to the County….” Missoula County funded construction of the hospital with low-interest municipal bonds. This Missoula County interest in the hospital, as intended by the founders, has been ignored. Minutes of the early board meetings should be reviewed.

5. There is no evidence that the CMC board of trustees seriously considered other options available to assure long-term viability. A sale should be the last resort, not the first option, especially in view of the sound financial condition of the hospital.

6. In March 2014, to expedite the pending sale of CMC, the board of trustees voted to amend the original 1976 Articles of Incorporation to allow proceeds go to other charitable organizations, including the University of Montana, cutting Missoula County out of $67 million. This created a potential conflict of interest for the board members who are UM employees or have a close affiliation. How did they vote? Should they have voted at all?

7. The vote of the CMC board of trustees was reportedly 7 to 6 in favor of the sale, indicating that the chair inappropriately broke a tie vote–hardly a consensus. Plus, board members with UM ties again had a significant potential conflict of interest and should have abstained from voting. Did they, and how would this action have affected the vote?

8. The CMC administration and board have misled the public by describing this transaction as a “partnership,” when in fact it is a liquidation of CMC assets. All new benefits will be determined by a for-profit seven-person board. CMC will have only one vote!

It is not clear to me if any of these questions were addressed before the sale was finalized.

I went to the Headwaters Foundation website to see how they describe themselves and their mission. The language is so saccharin and vacuous it makes me want to puke:

Headwaters Foundation was born from community. A community invested in western Montana. With more than $100 million in assets, our mission is to work side-by-side Western Montanans to improve the health of our communities. Our vision is a western Montana where all people, especially the most vulnerable among us, are healthy and thriving.

To fulfill our mission, we believe in and commit to these guiding principles.
We are humble, mindful and accountable to the people of western Montana. We are respectful of our relationships. Before we act, we listen with empathy and learn with openness. We are locally-driven and community-centered.

We engage in our work with the highest integrity. We build fair processes and procedures, have allegiance to facts and ethical decision-making, and invest in effective, evidence-based outcomes. We are honest, consistent and responsible and operate with transparency. We develop clear and explainable processes. We set clear expectations to ensure we meet our fiduciary responsibilities and avoid conflicts of interest. We foster justice in our work. We support leaders and activities that work to create a more equitable society. We foster inclusion and diversity within our staff, on our board and in the distribution of our resources.

Isn’t this nice? And yet, nowhere do I see anything that explains this foundation got this largesse from the controversial sale of a public asset. But they listen with empathy! They are mindful and humble! And they set clear expectations to ensure fiduciary responsibilities are met and conflicts of interests avoided!

Sure you do, Headwaters Foundation. Sure you do.

About Travis Mateer

I'm an artist and citizen journalist living and writing in Montana. You can contact me here: willskink at yahoo dot com
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3 Responses to What Is The Headwaters Foundation And Why Does It Matter?

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