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Another non-profit bites dust By Paul Fattig ASHLAND � Facing a cash-flow crisis so severe it has not paid state workers� compensation insurance for the past 10 months, the Rogue Institute of Ecology and Economy has suspended its work program and temporarily laid off 20 employees. It is the second local non-profit group in two weeks to face internal problems that threaten its survival. Headwaters� executive director, Rick Gwynallen, was arrested July 6 on charges of embezzling more than $170,000. The organization was forced to temporarily lay off its four-person staff. Born of high ideals The Rogue Institute for Ecology and Economy was born of high ideals in 1989. Following a vocal clash between timber industry workers and environmental activists at an acrimonious Jackson County Board of Commissioners� meeting, institute organizers decided there was a need to focus on common ground. It billed itself as a consensus builder that was bridging the gap between the two factions. In a 1992 interview with the Mail Tribune, Brett KenCairn, one of the institute�s founders and its first executive director, explained the group�s philosophy. "We believe the tradition of people working with a resource base is vital, not just to our economic health, but to the cultural health of our communities as well," said KenCairn, who left the post in 1996. "We want to give them new opportunities to work in sustainable forestry." Using government grants, donations and volunteer efforts, the institute began to train people how to do restoration work in the woods. It created an Ecosystem Workforce Training Program to help displaced timber industry workers and underemployed seasonal workers. The 10-month course involved four days in the field and one at Rogue Community College. The institute was also one of the first in the nation to create a sustainable forestry certification program. The goal of that program was to create a market for wood harvested in an environmentally friendly manner. Other programs created by the institute include forest stewardships, marketing for sustainable timber products, research on non-timber forest products and sustainable forestry demonstration projects. The Rogue Institute, whose mission includes training laid-off timber workers and others in sustainable forestry while working on Forest Service and Bureau of Land Management contracts, has an annual budget of $960,000. Since Oct. 15, 1999, the institute has not provided workers� compensation insurance as required by state law, according to the state Workers� Compensation Division in Portland. A contractor who provided services for the institute, who asked not to be identified, said he had not yet been paid for work he performed months ago. In response to inquiries by the Mail Tribune, the board issued the following statement Thursday: "The board and staff must now regretfully inform its members, partners, funders and friends that we have temporarily suspended program work pending resolution of some serious financial and organizational matters. "These issues have just emerged in recent days and we lack the facts to assess the full extent of the problems. We know that we have a severe cash flow crisis � how severe has yet to be determined." Only a few volunteers remain at its 500 A St. office. Volunteer accountants and other professionals are auditing the group�s financial status. Earlier this week, the Job Council in Medford, an organization which helps unemployed workers, met with institute employees to tell them the council is available if the institute closes and they need help in a job search, according to Bambi Powers, a program analyst at the council. Institute board members say there are no similarities between its problems and the Headwaters case. "At this point, we have no basis in which to bring the police into this," said Ron Hodgdon, co-chair of the board. "Maybe in all the work the financial people are doing we will see that kind of pattern," added board member Alan Reder. "As of now, nothing like that has emerged." Applegate Valley resident Chris Bratt, a co-chair of the board, is also chair of the Headwaters board. "The (institute) board was completely unaware of all the things that were happening," Bratt said. "The saddest part is the employees. We really have a topnotch crew. It�s really very sad." None of the board members would speculate on how much, or even if, money is missing. "We didn�t know about the workman�s comp thing until a few weeks ago," Reder said, noting that discovery triggered the internal investigation. In addition to the staff, the funders and the public deserve a full explanation, the two board members said. "We have a separate party coming in to look at some of the other internal elements," Hodgdon said. "We�ve been retrieving files and documents from years past. We�re going to take this thing back until we�re absolutely sure we�ve gone far enough back to make sure the whole issue is settled. "That�s going to take some time," he added. "We�re not trying to be evasive. We�re trying to be thorough." When the financial problem was discovered, the crews in the field were immediately brought in, he said. "We have a cash flow problem so severe that we couldn�t in good faith continue to operate," Reder said. "We know it�s severe. We just don�t know at this point how severe." It�s unlikely that the board of a non-profit organization could be held responsible for missing or embezzled funds, said Peter Cogswell, spokesman for the state Attorney General�s office. "A board has a fiduciary duty to manage the nonprofit in accordance with bylaws and relevant state laws," he said. "There is an expectation they run it in a manner consistent with those laws. "Generally speaking, if a board was totally negligent, completely neglecting its fiduciary responsibilities, it could conceivably be made to repay those funds," he added. "But that�s an extreme worst-case scenario." Board members have made a responsible effort to ensure there would be no financial problems, said Hodgdon, a Talent resident who has been on the board for nearly 10 years. "The board has been actively reviewing numbers that have been presented to us," Hodgdon said. In addition to attending monthly meetings, several board members would also attend weekly operational meetings, Reder added. An annual audit has also been required, according to board members. "The board hasn�t been away sailing," stressed Reder, a Rogue River resident who joined the board about six years ago. However, because the institute hasn�t had an executive director for about a year, the board has used a variety of consultants and a team approach to fill the void. Although noting he felt "pain, shock and anger" at the current situation, Reder said residents throughout the region have a stake in the future of the institute. "We�re so involved in trying to figure out what our current status is that we haven�t had a whole lot of time to talk in a detailed way about the future," Reder said. "The mission of this organization is really important," he added. "But we are unanimous that we want it to move forward after all of this plays out." 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