Saratoga News

Some dairy foundation supporters lose money

'Strings attached' donations can be refunded to donors

By Clarence Cromwell

Those who donated money to save the Claravale Dairy haven't gotten a refund even though the dairy foundation's rescue effort collapsed months ago.

Most who contributed cash to the dairy foundation will not receive refunds, members of the Claravale Dairy Preservation Committee confirmed last week. State laws require the foundation, if dissolved, to give its funds to a similar nonprofit. Only those who gave special strings-attached donations get refunds.

The city of Monte Sereno contributed $7,500 in March in order to hold the option agreement and recently asked for a refund. The city learned, however, that the money was spent for the designated purpose, City Manager Gay Strand said, so no refund is expected.

The committee set out to buy Kenneth Peake's historic farm for $1.25 million and lease it to Ron Garthwaite, the dairy's new operator. But the committee folded in March, after internal bickering, because members hadn't raised enough funds for the down payment. Two members insisted that the committee continue fundraising efforts, but the property quickly changed hands, and dairyman Garthwaite plans to move his cows to a Santa Cruz County farm this fall. A new owner will build a house on Peake's former pasture.

The dairy foundation had a total of $430,000 in cash and pledges as of May 1996.

Most of those funds never reached the committee's hands because a large portion of the donations were to be received upon purchase of the dairy.

Because of convoluted state laws regulating nonprofits and the process for dissolving nonprofits, the Claravale Dairy Preservation Committee has not yet returned funds to many cash contributors.

Committee members were consulting an attorney until early last week in an attempt to figure out which contributors must be repaid and what the foundation can do with leftover funds.

The committee must return some 80 percent of its money--all the money given on the condition that it be used for a specific purpose, such as closing costs or purchase of the land. An Aug. 19 letter from the dairy preservation committee states, "Most of the money came from one donor, in the form of a conditional gift. He stipulated that if we did not close escrow on the land, he wanted his money back. A few other large donors fell in this category."

The few who get refunds gave more than $1,000 each near the end of the fundraising campaign. Fundraisers accepted money with restrictions near the end of the fundraising campaign, in an attempt to meet fundraising goals.

The majority of dairy supporters gave smaller amounts and did not specify how it was to be spent; they won't get their money. About $15,000 of such funds remain.

The foundation spent $45,000 to maintain rights to purchase the property, under a deal with Peake. Another $15,000 paid for a fundraising consultant. And $3,000 went to legal fees, as of the Aug. 19 letter.

Foundation treasurer Adu Bagley declined to talk to the Saratoga News about exactly how much money was raised or how many people contributed to the foundation.

Some donors began to worry about when they'd get their money back. As the City Council gave approval for City Attorney Bob Logan to inquire about a refund for the city two weeks ago, Councilmember Joel Gambord mentioned that he'd like to know what's going on, since the foundation owes him about $1,000.

Others shrugged off the loss. Dairy foundation member Barbara Holden said she lost a total of $4,500, half in cash and half paid directly for fundraising activities. Former Monte Sereno mayor Nancy Hobbs said she gave $100 but won't miss it.

Holden said the committee considered giving leftover money to Deer Hollow Farm, Hidden Villa and the Los Gatos 4-H Club. The 4-H may need money for new animal pens because Los Gatos High School announced to the group that the animal pens located on the school property were to be replaced with playing fields.

The refund snag ends the long, dramatic saga of the dairy.

Monte Serenans got organized to save the dairy when Peake announced he would sell his land. He needed money for retirement, but residents wanted to save the dairy that Peak founded in the 1930s.

Garthwaite bought the dairy--cows and equipment--and agreed to lease Peake's land. A group of Monte Serenans formed the dairy foundation to buy Peake's land for the dairy. Garthwaite couldn't buy the property because its worth was far more than the tiny dairy can raise.

The forfeited donations aren't related to the operation of the dairy business.

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