San Francisco is giving $1.4 billion to more than 600 nonprofits this year to help tackle some of its biggest crises, from housing and homelessness to helping people find jobs.
But a new report released Tuesday by city officials suggests quite a few organizations getting city funding were not complying with the terms set out in their contracts, and two bad actors, in particular, were tagged with “red flag status.”
The Controller’s Office released its annual report detailing the financial and operational health of 192 organizations that were tabbed for monitoring. Of this group, 21 were found to not be “in conformance with all standards.” After a period where organizations were able to resolve their issues, a total of nine were found to still be out of compliance, according to the Controller’s Office.
The two contractors placed on “red flag status,” which indicates severe challenges that not only need to be more closely monitored but also rectified, are Positive Resource Center/Baker Places and the United Council of Human Services.
Financial mismanagement at Positive Resource Center, the administrative arm of the drug and mental health rehab nonprofit Baker Places, goes back years, according to tax returns and audits of the nonprofit. Supervisors decided to pull the plug on contracting for five of the organization’s programs after it asked for millions of dollars to remain solvent just months after a similar request.
The Standard reported in October that Lisa Pratt, a top Department of Public Health official, also collected an unauthorized $123,000 salary working 20 hours a week for Baker Places on top of her city salary. Pratt has since resigned from the nonprofit position, and the city has launched an investigation into her dual employment.
Last month, the Controller’s Office released an audit that found United Council of Human Services (UCHS) had a pattern of financial mismanagement while receiving $28 million in city and federal grants. It referred the organization to the FBI and the District Attorney’s Office for criminal investigations.
The Standard later learned that the CEO, Gwendolyn Westbrook, gave housing designated for homeless people to her friends, family and employees.
“As we continue our transition back into full-scale fiscal and compliance monitoring, the Controller’s Office will maintain our focus on continuous improvement of this program that monitors the health of the organizations delivering some of the city’s most critical services,” Controller Ben Rosenfield said in a statement. “The city needs to continue to strengthen programs to both support the organizational strength of these organizations while also monitoring their financial health and performance of the work they are contracted to provide.”
The audit also identified potential fiscal management and organizational concerns at two other contractors, elevating them to “concern status,” indicating issues that require additional attention: Bayview Hunters Point Foundation for Community Improvement, and HomeRise (formerly Community Housing Partnership).
The Bayview Hunters Point Foundation previously served as a fiscal sponsor to UCHS—meaning it was responsible for facilitating payments for the organization's workforce—and city officials and leaders of the foundation told The Standard that they pleaded with city leaders for months to get out of its contract with the organization.
The report noted that the departments with the most contractors in the monitoring pool include the Mayor’s Office of Housing and Community Development, the Human Services Agency, the Department of Children, Youth and Their Families, and the Department of Public Health.
Correction: A previous headline and version of this story did not note that some nonprofits were able to come into compliance after the City Controller's Office's review.