Two supervisors are demanding public hearings after an investigation by The Standard found the city gave millions to scofflaw charities that should have been barred from receiving the funds.
On Thursday, Supervisor Ahsha Safaí called for a hearing to get explanations from city departments about how they verify nonprofit contractors remain in good standing by complying with state and federal laws. He also proposed legislation that would require city-funded nonprofits to provide annual documentation to demonstrate compliance with federal tax law and state registry requirements.
“This is another example of why accountability is desperately needed over city departments entrusted with billions of dollars in taxpayer funds,” Safaí said in a statement. “The current approach to annual nonprofit oversight clearly isn’t working—we need to fix it.”
San Francisco relies on nonprofits to provide many social services, from providing supportive housing to people without shelter to running youth programs to hosting community concerts. To pay for those services, San Francisco issued nonprofits about $1.4 billion last year.
In the past six months, departments across the city failed to confirm that dozens of nonprofits were registered with the state before issuing them $25 million in payments. Those organizations should have been legally blocked from receiving the funds after falling out of compliance with the California attorney general’s state registration requirements. The AG’s Office had revoked, suspended or tagged the nonprofits as delinquent.
As of December, the city still had active contracts with nearly 140 nonprofits that lost their good standing. The awards totaled more than $300 million.
Supervisor Catherine Stefani also slammed the departments’ negligence, saying The Standard’s report showed there was a lack of due diligence when it comes to monitoring compliance.
“I have long thought that we are not paying enough attention to nonprofit performance and accountability,” Stefani said in a phone interview Thursday. “It’s very disappointing, and it seems like something that would be so easy to check—whether or not this is a real nonprofit, or whether or not the nonprofit still has [good] status.”
Since last fall, Stefani has worked with the City Attorney’s Office on introducing legislation that would standardize and strengthen monitoring of nonprofits’ compliance and performance. She said she is hoping to have a hearing by next month.
Near the end of last year, Stefani retweeted a story by The Standard on the United Council of Human Services (UCHS), an organization that provides shelters and housing for homeless people and has been accused of mismanagement.
The City Controller’s Office and City Attorney’s Office referred UCHS to the FBI and the District Attorney’s Office for criminal investigation after the organization received more than $28 million in grants. The Standard later found that the Attorney General’s Office suspended UCHS’s nonprofit status in June.
“What we really need is for people not to just gloss over these contracts, for people to really read and really understand what we are asking them to do,” Stefani said.
Sluggish progress in solving some of the most intractable issues has led to calls for stricter oversight for the funds flowing out of city coffers. In November, voters overwhelmingly approved Proposition C, creating a new commission to oversee the city’s homelessness response.
The Department of Homelessness and Supportive Housing had nearly $88 million in open contracts with nonprofits that lost their good standing with the state as of December. That amount was more than any other city department.