Caring for Denver spends public funds on alcohol, problematic grantees

the Auditor at your service

Timothy M. O’Brien, CPA, Auditor of Denver

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I have just released a new audit that raises serious concerns about how the Caring for Denver Foundation manages taxpayer dollars. My team found that the foundation’s staff regularly claim taxpayer-funded meals and alcohol expenses and the organization must improve their inadequate grant management processes.

Denver voters approved a 0.25% sales and use tax increase in 2018 to create the Caring for Denver fund and help improve mental health services and support programs for opioid and substance use disorders in Denver. The city contracted with the Caring for Denver Foundation to manage the program, which has awarded more than $185 million to 270 organizations through 2024.

Caring for Denver spends public funds on alcohol, problematic grantees

The audit found three grantees falsely reported partnerships with other agencies. One of them received a grant of about $310,000. Foundation staff said they did not verify every claim made by applicants and were not consistently conducting thorough reviews. In a sample of 35 applications, 14 — or 40% — were missing at least one required financial document.

In another case, a nonprofit executive director received $568,000 for programs serving children and families despite a prior formal domestic violence allegation. My team noted that best practices call for assessing financial and legal risks to determine an applicant’s suitability.

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The audit also identified 10 grants that did not align with the city ordinance that created the fund. Two grants totaling $26,000 supported staff self-care, wellness retreats, healing circles, hazard pay, and paid time off — uses not mentioned by the ordinance. The foundation disagreed with recommendations to improve its grantee review and selection processes.

We also found the foundation does not require consistent demographic or geographic data from grantees and does not verify the information it receives, limiting its ability to measure program effectiveness.

Caring for Denver spends public funds on alcohol, problematic grantees

The audit also discovered unallowed alcohol and meal expenses. Of 734 sampled expenses, 598 involved meal reimbursements. At least 75 reimbursements included approximately $3,130 in alcohol, with more than 70 drink purchases at a single restaurant exceeding $20 each.

City rules allow for food and beverage costs to be reimbursed only when they are necessary to carry out an agency’s mission, not for alcohol or routine meals. Foundation leadership defended these expenditures as relationship-building efforts consistent with “foundation best practices.”

Caring for Denver and the Denver Department of Public Health & Environment disagreed with several recommendations, including a proposal to amend the city contract to require adherence to city Fiscal Accountability rules involving food and beverage expenses.

I am deeply concerned about the misuse of public funds. By rejecting seven of the 15 recommendations, the foundation leaves significant risks unresolved. My team will follow up with the implementation of the accepted recommendations to ensure accountability.