Former Avon-Based Charity Serve new England Ordered to Dissolve After AG’s Investigation Discovers Organization Failed to Address Declining Financial Situation
BOSTON – Serve New England, Inc., a food co-op formerly located in Avon that had for many years provided individuals, families and institutions with discounted food packages, has been ordered to dissolve after an investigation found that the organization’s management and board failed to properly respond to declining financial conditions that contributed to the closure of the non-profit, Attorney General Martha Coakley’s Office announced today.
“There are tens of thousands of charities in this state whose mission is to help those in need, and it is disappointing that in this case the poor management decisions of a few will affect so many,” AG Coakley said. “We felt that dissolution of this organization was the right remedy for this situation.”
In August 2010, the AG’s Office began an investigation after receiving a number of complaints that Serve New England was not delivering food packages to vendors and individuals. Investigators determined that in June 2010, Serve New England had abruptly ceased operations. The complaints received by the AG’s Non-Profit Organizations/Public Charities Division alleged that individuals and families had paid Serve New England in advance for packages of food that were never provided, and, furthermore, that no refunds had been provided for the prepaid amounts. The complaints also alleged that Serve New England had promised that the food bundles would be forthcoming, but then had delayed the delivery date of the bundles. Finally, it was alleged, Serve New England failed to provide the food bundles and ceased responding to inquiries.
In response to these complaints, the Attorney General’s Non-Profit Organizations/Public Charities Division conducted a financial review of Serve New England to determine whether there was any indication of misuse of charitable funds, and to try to understand the financial reasons behind Serve New England’s abrupt closure of operations. While the AG’s review did not reveal a misuse of charitable funds by the charity or its employees, it was clear that Serve New England’s former executive director, Ann Adams, and other members of management and the board failed to plan for and respond to changes in the marketplace and the organization’s own finances at a time when its services were in greater and greater demand.
Serve New England’s management failed to take adequate steps to ensure that the organization could continue to meet the needs of its customers and could satisfy all of its continuing obligations to its vendors and suppliers. The management’s failure to adapt to changing circumstances led to cash flow problems, unpaid vendors, and customers who made prepayments for food they would never receive.
Investigators also discovered that Serve New England’s Board of Directors, while apparently aware of its responsibilities to provide oversight of management, ultimately failed to take the necessary steps to provide the kind of oversight that good governance practices require. The Board had concerns about the financial health of Serve New England, but did not pursue management for evidence that those concerns were being addressed. The AG’s office believes that it was the board’s responsibility to pursue management for adequate responses or to make changes in management.
In a letter addressed to Adams and the Board of Serve New England, the AG’s Office is requiring that the organization dissolve after it files its remaining financial filings for fiscal years ending in 2009 and 2010. Failure to submit such filings will result in the assessment of civil penalties against each member of the board. Such civil penalties, if assessed, can accrue at the rate of $50 per day per missing report.
This matter was handled by Assistant Attorney General Jonathan Green, together with the assistance of investigator Daniel Ferullo, both of Attorney General Coakley’s Non-Profit Organizations/Public Charities Division.