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Politics & Policy

San Francisco spent millions on Covid relief gift cards. Where did they go?

Tuy Viet, a volunteer, places pears into a plastic bag as she goes down the line of goods to be distributed to participants of a food program in San Francisco on Oct. 10, 2022. | Justin Katigbak for The Standard

San Francisco leaders sent out an urgent plea in the spring of 2020, calling for donations to help those in need at the start of the Covid pandemic. The money was supposed to fund gift cards for families struggling to put food on the table, help deliver groceries to seniors and the disabled, provide grants to small business owners and assist those who couldn’t afford to pay rent or utility bills.

Donors large and small opened their wallets, and the Give2SF’s COVID-19 Response and Recovery Fund raised over $30 million. Donations ranged from seven-figure infusions from Salesforce and the Gettys to denominations as modest as a dollar from concerned San Franciscans.

But now, the city can’t account for a good chunk of that money. 

An audit completed this year found that San Francisco’s Human Services Agency, which provides a range of welfare services including food and healthcare programs, ignored city rules when it came to distributing thousands of gift cards. It’s uncertain if any of the gift cards were stolen or went to ineligible recipients, but a lack of oversight created a situation ripe for “possible instances of fraud, theft, or abuse,” auditors for the City Controller’s Office wrote.

City Controller Ben Rosenfield works in his office at City Hall in San Francisco on Nov. 9, 2018. | Paul Chinn/The San Francisco Chronicle via Getty Images

The audit focused on the handling of $2.5 million in gift cards purchased by the Human Services Agency between August 2017 and March 2021. Specific issues noted in the audit included a failure by city staff to conduct verification checks of gift card inventory, require updated lists of eligible gift card recipients and make sure partner organizations were complying with city rules.

All but one of the eight programs reviewed in the audit that received Human Services Agency gift cards—broken up into prepaid Visa debit cards and gift cards to Safeway and Target—received money from Give2SF’s COVID-19 Response and Recovery Fund.

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Donors were shocked and disappointed when The Standard informed them of the audit’s findings. 

Robert Fruchtman, a 33-year-old software engineer who moved to San Francisco a decade ago, gave two donations to Give2SF worth $600 total. He said the lack of controls on how the gift cards were distributed left him “practically speechless.”

“I’m stunned,” Fruchtman said in a phone interview. “I could have donated to other organizations where I would know it’s going to a good cause. I never thought the city was perfect, but I didn’t think it could be this bad.”

The auditor’s report made six recommendations on gift cards for the Human Services Agency, which has a billion-dollar budget and provides services to 225,000 San Franciscans. The recommendations include basic accounting practices such as checking inventory counts against packing slips and conducting site visits to ensure organizations handle gift cards in accordance with city rules. An update on the progress for these recommendations is expected in the coming weeks, according to the Controller’s Office.

The issues raised in the audit weren’t confined just to the Human Services Agency, though. Eight community organizations reviewed in the audit failed to adhere to the city’s rules on gift cards, as well as their own policies.

Healthy San Francisco, a program for uninsured city residents run by the Department of Public Health, distributed a half-million dollars in Safeway gift cards but did not have a process to confirm if cards were received by the intended people, according to the audit. Two other entities, In-Home Supportive Services and Shanti, did not keep an inventory log for gift cards and failed to track how much money they distributed over time.

“It was not possible in the midst of the early part of the pandemic to get over 2,000 people to personally sign for the gift cards and verify identities,” Human Services Agency officials said in an email. “In addition, at that point in the pandemic, in-person contact for receipt of the gift cards was not recommended from a public health perspective.”

Officials added that the department received “many thank you notes” from people who received the gift cards.

Clara Jeffery, editor-in-chief of the magazine Mother Jones, said she donated $500 to Give2SF after seeing a Heather Knight column in the San Francisco Chronicle calling on the city’s billionaires to open their checkbooks

“I even think gift cards were mentioned” in the story, Jeffery said, adding that in principle she agrees with not forcing needy people to “jump through a lot of hoops,” especially in an emergency like the pandemic.

“Obviously, the city should have good record-keeping,” Jeffery said. “It may not be possible in emergency situations to do everything. But at the very least, you have to have some kind of protocol that doesn’t just turn into graft or waste.”

City officials drafted new rules for gift card oversight two years before the start of the pandemic, but it appears those guidelines quickly went out the window during the public health emergency.

Trent Rhorer, center, executive director of the Human Services Agency, talks with then-Mayor Ed Lee, right, during a tour of the shelter at San Francisco's Pier 80 in February 2016. | Lea Suzuki/The San Francisco Chronicle via Getty Images

Trent Rhorer, executive director of the Human Services Agency, was not available for comment Friday, but the department issued a statement saying the agency agreed with the audit’s findings.

“As a result of the report, we have strengthened our gift card controls in how we procure, track and distribute gift cards, both directly to individuals and through select community provider partners, to alleviate the possibilities of misappropriations,” officials said.

The department defended its actions and noted that it was trying to “deliver aid as quickly as possible to individuals and communities who were most impacted by the pandemic.”

However, that wasn't true in all cases. The audit also found that one program distributed just one of 500 gift cards over the course of a year, suggesting that city officials were falling short in their monitoring duties on both sides of the spectrum.

a woman in a mask swabs a mans nose
Mission District residents get tested for COVID-19 at the testing site on 24th and Capp streets in December 2021. | Camille Cohen/The Standard | Source: Camille Cohen/The Standard

“It’s not the end of the world that 500 gift cards didn’t get distributed,” said Supervisor Aaron Peskin, noting that the unprecedented nature of the pandemic required more than 70 emergency orders. “I worry about not having documentation as to where all of these gift cards went. You certainly pray there was no misuse of them.”

Supervisor Hillary Ronen was one of the biggest backers of Covid relief donations, serving on the Give2SF oversight committee. In the Chronicle’s story two months into the pandemic, Ronen expressed exasperation that San Francisco’s billionaires weren’t giving more to boost the fund into the “hundreds of millions.” She did not respond to a request for comment about the city’s handling of gift cards.

The uncertainty on whether the gift cards made it to the neediest San Franciscans has left donors like Fruchtman hesitant to support the city if called upon again.

“I probably won’t give to San Francisco in future crises,” he said. “I don’t know if my money was wasted or not.”