Denver's Mental Health Fund Couldn't Document 94% of Admin Costs
Summary
Denver's independent auditor sampled 734 administrative expenses the Caring for Denver Foundation charged to the city's voter-approved mental-health tax fund between January 2022 and January 2025, and found 693 of them -- 94 percent -- missing the documentation the city's own fiscal rules require. Separately, the foundation awarded seven of ten grants it classified as 'innovative,' worth about $960,000, back to itself, while three outside grantees turned out to have falsified city partnerships, gone unregistered with the state, or been run by an executive with a domestic-violence allegation on file. The city's auditor first flagged foundation oversight gaps in 2020; a 2023 follow-up found the same risks still there. This time, the foundation disagreed with seven of the audit's 15 recommendations.
A quarter-cent tax, and the nonprofit that spends it
Denver voters created the fund in November 2018⧉ by approving a ballot measure that raised the city's sales and use tax by 0.25 percent, dedicating the money to mental health services, opioid and substance-use prevention, suicide prevention, and homelessness programs. The city's Department of Public Health & Environment contracts the Caring for Denver Foundation, an independent nonprofit created for the purpose in 2019, to run the grantmaking. By the foundation's own count, it had awarded more than $185 million in grants to 270 different organizations⧉ since its founding. City ordinance caps the foundation's administrative spending at 5 percent of annual sales-tax revenue -- on average, nearly $2.5 million a year⧉.
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Board members responsible for approving reimbursements told auditors meals were supposed to be the "exception, not the rule"; the foundation paid for 598 of them anyway over the three-year sample period, and one executive claimed an average of four meals a week⧉ -- in multiple weeks, more than eight, and once, ten. Of 207 meals reimbursed with only a credit-card slip rather than an itemized receipt, auditors requested the missing receipts from restaurants directly and got 85 back. Those recovered receipts showed the same executive's meals included at least $3,130 in alcohol -- a category Denver's fiscal rules and a citywide executive order both bar reimbursing with tax dollars, which foundation staff said they interpreted differently.
View data as table
| Lacked required documentation | 693 | 94% -- missing at least one of: date, amount, description, itemized list, or necessary approvals |
|---|---|---|
| Had required documentation | 41 | 6% -- documented does not necessarily mean allowable |
The grants that skipped their own review
A parallel gap showed up in how the foundation vets the organizations it funds. Auditors sampled 35 grant applications across 15 grantees and found only nine -- 26 percent -- with no issues at all⧉. Three grantees had falsely reported partnerships with city agencies, including the Denver Sheriff's Department and the District Attorney's Office; one, whose application listed a partnership directly tied to its funding request, was awarded about $310,000 over two years. Five grantees weren't registered with the Colorado Secretary of State's office when they applied, a requirement under state charitable-solicitation law. One nonprofit's executive director, applying for a grant to work with children and families, had a prior formal domestic-violence allegation involving children present filed with the courts; that organization was awarded about $568,000 from 2022 through 2024.
Fourteen of 35 application packets were missing at least one required financial document, and auditors found no record staff ever flagged or formally waived the gap. All seven grants the foundation awarded to itself skipped its own review steps entirely: five were reviewed by the same staff who submitted them, and in one case the same executive director both submitted and approved a grant.
Money the foundation gave itself
The foundation classified ten grants awarded from 2022 through 2025 as "innovative" -- a category the audit found doesn't appear anywhere in the city ordinance's list of allowed purposes, which is limited to mental health, suicide prevention, substance use, and homelessness programs. Seven of those ten grants, worth about $960,000⧉, went to contractors the foundation itself hired -- for grantee training and data-capacity support, program evaluation, a radio segment, bilingual podcasts, and video production. The remaining three, about $590,000, went to outside grantees for purposes auditors said didn't align with the ordinance either: one $550,000 grant funded "capacity-building" services for 20 other grantees, and two smaller grants paid for staff retreats, healing circles, hazard pay, and paid time off at the recipient organizations.
View data as table
| Foundation awarded to itself | 960,000 | 7 of the 10 grants -- 70% -- paid contractors for training, evaluation, podcasts, radio, and video services |
|---|---|---|
| Outside grantees, for staff wellness/capacity | 590,000 | 3 of the 10 grants -- to fund grantee staff retreats, healing circles, hazard pay, and paid time off |
A pattern the city has flagged twice before
This isn't the auditor's first look. A 2020 audit proposed 10 recommendations⧉ to fix foundation oversight; the foundation and the health department agreed with nine of them. A 2023 follow-up found the same key risks -- unclear contract roles, unallowable expenses, overspending on administrative costs -- still there. The audit that produced the numbers above traces back partly to December 2024 news reporting that raised similar concerns, which auditors used to help pick which grantees to sample this time.
Denver Auditor Timothy O'Brien wrote in his cover letter that he is "disappointed the foundation and department chose to disagree with seven"⧉ of the audit's 15 recommendations -- including one to require the foundation follow the city's fiscal accountability rules for administrative spending, and another to amend the ordinance so it actually defines what an "innovative" grant is.
The takeaway
- 94% undocumented is a paperwork finding, not proof every dollar was misused. Auditors separately found 571 of the same 734 expenses (78%) had "questionable" allowability and 83 (11%) were outright not allowed under city rules -- categories the audit doesn't state as mutually exclusive, so they shouldn't be added to the 693 figure or to each other.
- The self-dealing wasn't hidden -- it just skipped the rules everyone else follows. The foundation didn't disguise that it was granting itself roughly $960,000; auditors found it simply exempted those seven grants from the review process it applies to outside applicants.
- The city has now flagged this pattern three times -- 2020, 2023, and 2026 -- and this time the foundation pushed back harder. Implementation deadlines for the eight recommendations it did accept run from April through August 2026; the city's contract with the foundation is up for renewal in 2027.
This piece follows the Denver Auditor's February 2026 performance audit exactly as it reports its own findings; all agency responses -- including the Department of Public Health & Environment's and the foundation's disagreements with several recommendations -- are the audit's own appended text, not this outlet's characterization. The $960,000 and $590,000 grant totals are the audit's own rounded 'about' figures; summing them to roughly $1.55 million is this outlet's own arithmetic, not a total the audit itself states. The audit does not state whether its 571-expense 'questionable allowability' finding and its 83-expense 'not allowable' finding overlap with each other or with the 693-expense documentation finding, so this piece presents each finding on its own terms rather than assuming they add up.
Sources(1) ▾
- City and County of Denver, Office of the Auditor, Audit Services Division (Timothy M. O'Brien, CPA, Denver Auditor), Multi-Agency Audit Report: Caring for Denver Foundation (February 2026) (2026-02-19) — The Denver Auditor's independent performance audit of the Caring for Denver Foundation, the nonprofit contracted by the city's Department of Public Health & Environment to manage Denver's voter-approved 0.25% mental-health sales tax. Source for every dollar figure, percentage, and quote in this piece describing the foundation's administrative expense practices, grant due-diligence process, self-directed 'innovative' grants, and conflict-of-interest form compliance, including the foundation's own written agency responses appended throughout. denvergov.org · original document
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Denver's independent city auditor sampled 734 administrative expenses -- board and committee costs, staff meetings, travel, training -- that the Caring for Denver Foundation⧉ charged to the city's voter-approved mental-health tax fund between January 2022 and January 2025. The auditor found 693 of those expenses -- 94 percent -- missing at least one of the basic elements Denver's own fiscal rules require: a date, an amount, a description, an itemized list, or a documented approval. Among what auditors could verify: $8,190 in meals from a single high-end Denver cocktail lounge, and a foundation executive whose recovered receipts showed at least 75 meals with alcohol -- about $3,130 worth.