A huge portion of San Francisco's annual budget gets paid to nonprofit partners that perform much of the work that certain city departments are responsible for. And it looks like it's been a while since anyone has audited where this money is going.
Fallout continues from the November revelation, made by the San Francisco Standard, that a nonprofit that receives city funding had lost its nonprofit status and has actually been referred to the FBI for possible criminal investigation. That nonprofit is called United Council of Human Services (UCHS), and today we learn, again from the Standard, that UCHS is not alone among SF funding recipients in being a delinquent or stripped of its nonprofit status at the state level.
The Standard's latest exposé finds that departments like the Department of Homelessness and Supportive Housing; the Department of Children, Youth and Their Families; and the Mayor’s Office of Housing and Community Development have paid out $25 million to nonprofits currently "not in good standing" with the state — which could mean they are delinquent in re-registering with the state's licensing authority and paying for their registration. Further, they paid $65 million to nonprofits that have since fallen out of good standing.
In total, we're talking about some 140 nonprofits with current contracts with the city which are not current on their own registrations with the state — or, in the case of a handful of these organizations, they've fully lost their nonprofit status, like UCHS, or had it suspended.
City Controller Ben Rosenfield issued a statement to the Standard in response to their reporting saying "City departments should not do business with organizations that are not permitted by the state government to operate in California." And the City Attorney's Office said it would be working with Rosenfield's office to "ensure grant and contract recipients are in good standing" with the state.
The Mayor's Office put out a fairly unperturbed statement saying, "We look forward to receiving guidance from the Controller’s Office on working with our nonprofit community-based providers to ensure they are in good standing with all applicable requirements."
The story points to a problem that many SF taxpayers suspect but usually can't prove — namely that the city's enormous budget is likely not being spent 100% wisely.
But it's not clear, statewide, how common a phenomenon this is, falling out of "good standing," or what percentage of accredited nonprofits in the state are out of "good standing" at any particular time or late with their registrations. Nonprofits that aren't fully up-to-date on their registration with the state are not legally allowed to retain staff or receive or spend money, but clearly many are doing this anyway, and perhaps these accreditation issues mostly just amount to wrist-slaps.
One lawyer who works often with the city tells the Standard that this story is "emblematic of the city giving money without any oversight," which, the implication is, happens a whole lot.
Colleen Murakami, the chief development officer for the nonprofit Swords to Plowshares which provides supportive housing to veterans — and which receives around $20 million annually from the city — tells the Standard that this is all much ado about nothing.
"The delinquent status does not, in any way, say anything about your ability to be a good steward of public dollars,” she says. “It’s literally saying you didn’t file a form."
Photo: Gordon Mak