Founder and former executive director of Seeds Community Café Lyn Harwell has resigned after the nonprofit's board discovered the pay-as-you-can café was $107,000 in debt.
More than half of that has been covered and board members said Thursday that Seeds will remain open while the rest is paid off.
Accounts of how Seeds, located in an alley on the 100 block of East Pikes Peak Avenue in the heart of downtown Colorado Springs, got into a hole and who's at fault are disputed by Harwell and the board.
President Gene Tanski said red ink was discovered last fall after new board members took over. The new board members wanted to expand by starting a food consortium in partnership with a variety of foundations.
But that had to be shelved, he said, because members found that the nonprofit was deeply in debt - the bills included state and city taxes, insurance payments, employee salaries and payments to vendors. The previous board was unaware of this, according to Tanski.
"These were big alarms for us, some of which are potential legal problems," Tanski said. "Where we thought we just needed to fundraise to catalyze an extension of our efforts to address hunger, security and poverty, we instead were saying, 'Jeez, we have bills to pay.' Vendors were still coming to us as late as May of this year saying we owed them money."
Charges to the company account made by Harwell included dining at local restaurants, movie tickets, dog grooming appointments and personal cellphone expenses. These personal expenses added up to about $3,700. The debt and expenses were first reported by the Colorado Springs Business Journal.
According to an email from Tanski to Harwell on March 23, Tanski suspended Harwell from his duties with Seeds without pay but offered to "discuss what role makes sense for [Harwell] to play in Seeds' future." Harwell formally resigned on April 12 with the understanding that he would continue with Seeds as an ambassador. Tanski said that the board also waived Harwell's financial responsibility to Seeds when they realized the full extent of the debt.
According to Harwell, the board raised none of these concerns to him until the Business Journal published a story on May 26 about Harwell's new café at the Manitou Art Center scheduled to open this June. Although Harwell acknowledged Seeds' debt, he also claimed that the $107,000 figure Tanski gave The Gazette did not "come close" to matching the number that he remembered from the December board meeting.
"I don't think there is much debt to uncover that I hadn't told the board about, so I have to disagree with the board on their accusations," Harwell said. "Nonprofits always have financial challenges, but I never saw anyone on the board freaking out on me until a couple weeks ago when the Business Journal article came out."
"The board knew about my expenses and the debt. Everything was always transparent, and the board was always fine with it until now. I'm confused by their accusations."
Harwell said that none of the concerns about the debt preventing Seeds' participation in the food consortium were brought up in board meetings, only that the fundraising requirements weren't feasible. He confirmed that he had used the company account for personal purchases, but that he "was told he could charge those personal expenses" and that "the accountants would place them against his salary."
Tanski agreed that the board was aware of the debt and expenses, depending on the time frame in which Harwell is talking.
"If he's talking about January 2017, then yes, we did know that he had not paid the necessary taxes and insurance and the right people. But we knew that because the board had been digging since the fall," Tanski said. "Did the board know that in June 2016? No, because Lyn had control of the finances at that time. It took the turnover of the board with new people asking new questions to bring to light the true financial situation."
In response, Harwell reiterated that the board "is ultimately in charge of finances" and that "it's hard for him to give an answer" as to where the $107,000 figure came from.
"For certain board members to be taking an adversarial position at this point is confusing," Harwell said. "I find it alarming that they would want to harm Seeds' reputation and not want to set the new executive director up for success."
Some members of the community have reacted similarly, asking what good it does to oust a member of the nonprofit community with good intentions, Tanski said. Others disagreed, saying it was necessary for Seeds to expand.
"We're now taking responsibility and working towards a clean slate so we can make the impact that Lyn set out to make," Tanski said.
As of May 22, the board had paid off about $42,000 of its debt. The board has squared away the insurance portion and has just over $3,000 of state and city tax payments remaining, which it plans to pay off in three months.
After paying the taxes, the board will focus on paying vendors and employees. Tanski emphasized that none of the money Seeds used or will use to repay its debt was foundation grant money, only profit from the café, the food truck and fundraising.
Seeds Community Café was founded in 2013 by Harwell, a chef, volunteer and community activist, based on a pay-what-you-can concept set forth by local nonprofit One World Everybody Eats Foundation. The idea is that those who can afford it, should pay more, than what their food costs, while those who can't are expected to volunteer in exchange for their meal.