San Francisco dishes out more than a billion dollars annually to nonprofit organizations, but the city's oversight of those dollars has been the subject of growing scrutiny in the wake of scandals.
On Tuesday, the Board of Supervisors passed a bill requiring nonprofits receiving city funds to submit tax and governance documents confirming their nonprofit status and to designate the city administrator as the sole collector of such information. The bill, which was sponsored by Supervisor Ahsha Safaí, passed unanimously.
"This ordinance is a first step towards cleaning up nonprofit oversight," said Safaí at Tuesday's meeting.
The Standard reported in January that last year San Francisco agencies gave more than $25 million in taxpayer dollars to nonprofits that were blocked by state law from receiving or spending funds. The revelation suggested widespread problems in the oversight of grants and contracts for such groups.
The status of dozens of nonprofit organizations had either been revoked, suspended or tagged as delinquent by the state Attorney General’s Office prior to the payouts. As of December 2022, the city had active contracts with nearly 140 nonprofits that had failed to comply with state registration requirements.
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The Standard launched its investigation of city-funded nonprofits after the United Council of Human Services, an organization providing homes and shelters for homeless people in the city's Bayview neighborhood, was referred to the FBI and the District Attorney’s Office for what officials described as a pattern of severe mismanagement.
The Standard subsequently found that the Attorney General's Office had suspended United Council's nonprofit status, meaning it was not permitted to solicit donations or operate as a charity in California.
Another nonprofit called Baker Places fell under scrutiny last year after it asked the city for two emergency bailouts, threatening to close some of its programs. An investigation by The Standard found that a top Department of Public Health official, Lisa Pratt, had improperly collected a six-figure salary from the nonprofit alongside her full-time job as the city's director of jail health services.
Records show that the city lacks a standardized system for monitoring nonprofit performance, in many cases relying on the honor system since the pandemic. Both UCHS and Baker Places received largely glowing reviews from city agencies last year, not long before they were accused of mismanaging public funds.
“This is exactly why San Franciscans are skeptical about how we are spending taxpayer dollars,” Supervisor Catherine Stefani told The Standard in March. “Last year, we spent $1.4 billion on city contracts. And yet, the checks that are supposed to prevent and identify mismanagement failed.”