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Architecture Group Faces $3M Lawsuit

Thursday, July 14, 2016

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The leaders of a now-defunct U.S.-based humanitarian architecture and design group face a $3 million lawsuit alleging the mishandling of donated funds, according to various reports.

Architecture For Humanity, its co-founders Cameron Sinclair and Kate Stohr, and 10 former members of the organization’s board of directors are named defendants in the lawsuit filed June 10 in the San Francisco division of the U.S. Bankruptcy Court, Northern District of California, reports relate.

Architecture for Humanity
Towle Neu / Wikimedia Commons / CC BY 2.0

Architecture For Humanity’s Yodakandiya Community Complex, Sri Lanka (2007) was shortlisted for the 2010 Aga Khan Award for Architecture.

Founded in 1999, the organization was responsible for mobilizing 75,000 architects for disaster relief and architectural solutions to humanitarian problems. It closed its doors abruptly in January 2015, filing for Chapter 7 bankruptcy, citing the lack of funding to continue.

The new lawsuit may shed light on the nonprofit’s demise.

‘Restricted’ Funds Used

The suit alleges that between July 2012 and December 2014, the organization’s leaders breached “fiduciary duties of care and loyalty” owed to the organization by using millions of dollars in donations—“restricted” for actual project expenses—for administrative and overhead costs, or “unrestricted” expenses, according to ARCHITECT magazine.

The lawsuit is seeking $3 million plus interest in damages to be distributed to creditors involved in the bankruptcy suit, including A-list public- and private-sector partners: the American Institute of Architects, AIA Foundation, the U.S. Green Building Council, Carnegie Mellon University, the Alcoa Foundation, Amazon and NIKE USA.

The nonprofit’s tremendous growth may have been partly responsible, FastCo Design reports. AFH’s gross revenues rose from $1.7 million in 2009 to $12.3 million in 2013, resulting in increases in overhead and administrative expenses, including salaries, fund-raising services and the purchase of a building, ARCHITECT noted, citing the court documents.

Leaders Were Warned

The suit also alleges that the organization’s leaders were likely made aware of the misuse of “restricted” funds in early 2014, when its legal counsel so warned, reports said.

“If it had heeded those warnings and shut down in early 2014, it could have taken the $3 million it had left in its coffers and redistributed that money to the donors who gave it,” FastCo Design suggests. “Instead, AFH kept operating, even going after new donations, until it declared bankruptcy a year later. When it shuttered, it had only $200,000 left.”

Lasting Focus and Mission

Originally created to develop shelter for returning refugees in Kosovo, AFH focused on four types of projects: disaster reconstruction, creating community-centered "active spaces" in developing countries, developing education spaces, and pro-active training and design and technical expertise to prevent disaster.

Its motto, and the name of its first book: Design Like You Give a Damn.

Its global efforts included clearing landmines and building playgrounds in the Balkans; transitional housing and schools in many countries; and quake reconstruction assistance in Pakistan, Turkey and Iran. The organization also hosted a series of open international design competitions focused on addressing social and economic needs.

The organization's efforts have "provided on-the-ground support for major global crises, including disaster relief in post-Katrina Gulf Coast and in Haiti after the 2010 earthquake," noted inhabitat.com.

The group's many accolades and awards include the Center for Architecture Foundation Award, the Cooper-Hewitt National Design Museum's Design Patron Award, and the 2006 TED Prize for co-founder Sinclair.

Rebranding Effort

The mission of the celebrated nonprofit lives on, albeit under a new name.

The Open Architecture Collaborative, grown out of the shuttered nonprofit, is led by Garrett Jacobs, the former executive director of the AFH Chapter Network, a group of individual chapters that continued after the closure of AFH headquarters. The collaborative writes on its website it is “a network of local grassroots chapters delivering design advocacy, facilitation, assessment and small build services to their local marginalized communities.”

The group is determined not to repeat the missteps of AFH, reports say.

Open Architecture Collaborative
www.openarchcollab.com

The Open Architecture Collaborative was launched in March 2016, but its chapters have been in operation since 2005 under the previous name Architecture For Humanity, according to its website.

“From my time at Architecture for Humanity, I know there are many lessons to be learned from small problems and how they were or were not addressed,” Jacobs told news outlets.

A status conference on the lawsuit is currently scheduled for Aug. 26 at the San Francisco courthouse. Reports say it is unclear how involved the volunteer board members were in the operation of the nonprofit.

   

Tagged categories: Architecture; Architecture for Humanity; Bankruptcy; Business matters; Design; Ethics; Funding; Lawsuits

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