RALEIGH — Ten years ago, former UNC system president William Friday asked the General Assembly to "do something truly dramatic" with an anticipated $2.3 billion the state expected eventually to receive from a national tobacco settlement.
Friday backed creating a nonprofit organization that would use the proceeds to build a significant endowment and use the earnings to do lasting good for North Carolina's impoverished areas. It would focus on tobacco-dependent communities in a statewide economy that could no longer count on the profits from growing tobacco. The income would help retrain workers for new jobs, perhaps build health clinics and boost economic development in rural areas already struggling with job losses.
Opponents of the plan argued the money ought to go into the General Fund, defray the state's rising health care costs, or support education programs.
But legislators created what is now known as Golden LEAF (for Long-term Economic Advancement Foundation), and Friday became its first chairman.
In its one decade of existence, Golden LEAF has sometimes inspired its supporters with potentially transformative initiatives such as $100 million for a manufacturing facility at the Global TransPark in Kinston for aerospace component fabrication.
And it has infuriated its detractors by doling out money in ways that remind them of nothing so much as political slush funds financed with public money.
A recent critical report from State Auditor Beth Wood flayed the organization for its inability to produce minutes of meetings, criticized its ethics practices, faulted it for making a spending decision in closed session and blasted its refusal to fully cooperate with auditors. At one point an auditor was escorted out of a Golden LEAF file room that auditors had been given access to, prompting suspicions the foundation was trying to hide something.
That audit began last fall with Wood's predecessor, Republican Les Merritt. The file-room incident occurred about the time the foundation had just gotten its second president. Dan Gerlach, former head of the N.C. Budget and Tax Center who served the Easley administration as the governor's senior economic adviser, took over last October. His selection as president - after lobbying by then-Gov. Mike Easley and longtime Senate President Pro Tem Marc Basnight - did nothing to allay worries about political intervention in the foundation's activities. And the board has often included political operatives, reinforcing the image of a politically oriented operation.
Friday, who was chairman of the board for three years, said in an interview he had always been concerned about such perceptions. "The very thing we had feared was that politics would raise its ugly head," he said.
In this atmosphere, Gerlach and the staff at the Rocky Mount-based foundation have worked to regain public trust. They have responded to criticism by pursuing strategies to help more depressed counties determine their individual needs prior to applying for grants, while boosting closely targeted education and worker training programs for new kinds of work.
In a difficult economy, Gerlach noted, "a lot of foundations are cutting grants because income is down. We did not." Golden LEAF has continued making grants. And it has sharpened its focus, he said.
For example, it helped start a branch of a community college in Scotland County, provided laptops for students in Edgecombe County and worked on a meat marketing project in Caswell County to help families living on the land. It provides equipment at community colleges where local industries sign letters promising they'll hire the trainees.
Gerlach was involved in trying to recruit Boeing for a plant in North Carolina, and he was struck by company officials' concern whether they could get trained workers if they agreed to come. They didn't.
So now the foundation wants to prepare workers for such jobs when the opportunity occurs. There are four sections of the state with burgeoning aerospace clusters, he says - Elizabeth City, Kinston-Goldboro-New Bern, the Triad counties around Greensboro, and Monroe and Union County.
In Monroe, Gerlach said, the foundation made grants to South Piedmont Community College to train workers in handling specialized materials such as titanium. The effort includes working with students in middle schools to interest them in aerospace careers.
Golden LEAF was set up in part to take some risks. Gerlach says, "I think there are some things we thought would work that may not have. But we are going to take some risks and we are going to learn."
Gerlach seems determined to make sure that Golden LEAF's operations are not only transparent, but perceived as transparent as well. The foundation Web site, he says, has extensive data on operations at www.goldenleaf.org. He talks about making sure proposals are thoroughly vetted and critically examined before being funded. And the organization has committed to reviewing best practices available and using them in daily operations.
Gerlach has several tasks to master, not the least of them generating the dramatic results Friday envisioned and giving legislators little temptation to take all or part of the foundation's income for other purposes. It may be a tightrope act, given that many legislators are looking for revenue in every corner. He understands that, too.
"We need to be accessible," he says. "We're not where anybody affiliated with this organization thinks we ought to be," he said. He also notes, "We have made some headway."
Jack Betts is a Charlotte Observer columnist and associate editor based in Raleigh.