Nonprofits are both corrupt and ineffectual

From At least five interesting things for your weekend (#45) by Noah Smith.  

His item #6 is an example from San Francisco of what I regard as a central challenge in our modern governance - the over-reliance on non-governmental organizations delivering government services with inadequate oversite.

NGOs seem, at this point, to be piggy banks for the individuals involved and to function as left leaning advocacy propaganda sources.  They do not actually deliver the services needed and contracted for, to the detriment of the most marginalized and needy.

6. San Francisco nonprofits are both corrupt and ineffectual

In 2022, there was a big tech bust that deprived the city of San Francisco, and the state of California in general, of a lot of tax revenue. At that point, San Francisco began taking a harder look at the nonprofits to which it has famously outsourced many of its social services. Unsurprisingly, many cases of incompetence and outright corruption are being discovered.

The SF Standard is the best news outlet reporting on this ongoing series of investigations. For example, here’s a story about the Dream Keeper Initiative, a San Francisco city effort to help its rapidly dwindling Black population:

In February 2021 [San Francisco announced] the Dream Keeper Initiative, a landmark piece of legislation that promised to redirect $120 million to address issues caused by systemic racism…Over the last two and a half years, Dream Keeper’s successes have led to more than 1,300 people getting jobs or business training…Investments have been made in healthcare for Black mothers and infants…There’s also the Downpayment Assistance Loan Program, which has distributed more than $24 million to help 57 people purchase homes, a path to upward economic mobility…But despite the many good deeds of Dream Keeper, the initiative has become a bookkeeper’s nightmare…

SF Black Wall Street, a nonprofit that advocates for Black entrepreneurship, has received more than $2.3 million through Dream Keeper…But nearly a third of that money was spent on just two Juneteenth parties…that cost more than $700,000 to produce. That is more than the total amount ($660,000) SF Black Wall Street has spent on small business grants…

A closer inspection of IRS filings for SF Black Wall Street shows that one co-director, Tinisch Hollins, did not report taking a salary while doing 20 hours of work a week. Instead, she redirected tens of thousands of dollars in administrative fees to Ujima Global Consultancy, an LLC she created…[Dream Keeper Director Sheryl] Davis said she was not aware that directors of some of Dream Keeper’s nonprofit partners have set up shell companies, or that some directors have been giving themselves substantial raises — in the tens of thousands — immediately after the infusion of millions in city funds…

Dr. April Silas, CEO of the Homeless Children’s Network, which has received more than $3.7 million from the Office of Economic and Workforce Development, saw her salary increase from almost $232,000 in 2020 to more than $283,000 two years later…Davis confirmed that the Homeless Children’s Network was recently cut off from city funding…

One recipient of Dream Keeper money, J&J Community Resource Center, made headlines after its director tried to get booze and cigars reimbursed.

And here’s a story about SF Safe, a nonprofit that works with the police:

The fired former executive director of a San Francisco nonprofit has been arrested and charged with 34 felonies related to the misuse of more than $700,000 in public funds…Kyra Worthy, 49, of Richmond faces charges that include misappropriation of public money, submitting fraudulent invoices, theft, wage theft and check fraud during her tenure as head of SF SAFE, a nonprofit that partnered with the San Francisco Police Department…Worthy is accused of failing to pay more than $500,000 to subgrantees of a city contract, embezzling more than $100,000 from SF SAFE for personal use and committing wage theft against employees…

Prosecutors allege that Worthy’s mismanagement led to the 48-year-old charity ceasing operations in January, despite receiving millions in public and private funds over five years…Worthy allegedly spent lavishly on parties and events, even as the nonprofit struggled financially. Prosecutors say she spent more than $350,000 on luxury gift boxes in 2022-23 and nearly $100,000 on a single event called “Candy Explosion” in October 2023…In 2018, she allegedly paid her landlord $8,000 using three nonprofit cashier’s checks, telling accountants the funds were for community events…Court documents state Worthy spent more than $90,000 of nonprofit money in 2019 and 2020 on a home healthcare worker for her parents in North Carolina. She reportedly created vague invoices and categorized these payments as community meeting expenses and a District 10 safety project…

Prosecutors further allege Worthy stopped paying payroll taxes for 27 employees from September 2023 to January, when SF SAFE shut down. Court documents say she continued issuing regular paychecks, leading employees to believe taxes were being paid…The alleged wage theft totaled about $80,000 over four months. Worthy is accused of falsely claiming that full wages and taxes were paid when submitting invoices for a city contract…A holiday party, which was not a fundraiser, allegedly cost $56,000.

The practice of farming city services out to nonprofits is simultaneously a way of wasting giant amounts of money, and an invitation to corruption. The SF city government should be building up its state capacity to provide these services in-house instead of lobbing money at nonprofits.

That said, there also may be government corruption going on here. Sheryl Davis, the city employee who runs the Dream Keeper initiative, has also been accused of misuse of funds:

Allegations made against Davis in the whistleblower complaint range from using city funds to pay for trips for family and friends to designing contracts to be less than $10,000 to avoid formal reviews.

Records obtained from the city show that Davis [herself] charged the city for more than $51,000 in reimbursements from 2020 through the first half of 2023. That total was almost $22,000 more than the second-highest department head…Davis wrote a children’s book last year that netted her more than $10,000 in outside income. She acknowledged that the city did make one “bulk” purchase of the book but said she was unsure of how many copies.

So SF clearly has some cultural problems here. The nonprofit problem is important, but overall what’s needed is a crackdown on people who see the city government’s budget as their personal piggy bank. 

 

See the original for many links to sources.