Supervisors demand responses to sloppy non-profit scrutiny in San Francisco

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Two inspectors are demanding a public hearing after an investigation by The Standard found the city gave millions to charities that should have been disenfranchised.

Supervisor Ahsha Safai called a hearing Thursday to seek clarification from city departments on how they ensure nonprofit contractors remain in good standing while complying with state and federal laws. He also proposed legislation that would require non-profit organizations funded by the city to provide documentation every year to demonstrate compliance with federal tax laws and state registry requirements.

“This is yet another example of why accountability from city departments that are entrusted with billions of dollars of taxpayer money is sorely needed,” Safai said in a statement. “The current approach to yearly oversight of nonprofits is clearly not working—we need to fix that.”

San Francisco relies on non-profit organizations to provide many social services, from providing supportive housing for homeless people to running youth programs and hosting community concerts. To pay for these services, San Francisco gave about $1.4 billion to nonprofits last year.

Over the past six months, city departments have been unable to confirm that dozens of nonprofits were registered in the state before paying them $25 million. These organizations were to be legally blocked from receiving funds after they failed to comply with state registration requirements of the California Attorney General. The AG office has recalled, suspended, or flagged nonprofits as past due.

As of December, the city still had active contracts with nearly 140 non-profit organizations that had lost their reputation. Awards totaled over $300 million.

Supervisor Katherine Stefani also criticized departmental negligence, saying The Standard’s report showed a lack of due diligence when it comes to enforcement.

“I’ve long thought we weren’t doing enough about nonprofits and accountability,” Stefani said in a phone interview Thursday. “This is very disappointing, and it seems like it would be so easy to check if this is a real non-profit organization, or if the non-profit organization still has [good] status.”

Since last fall, Stephanie has been working with the city’s attorney’s office to introduce legislation that would standardize and strengthen enforcement of nonprofit regulations and their effectiveness. She said she hoped to have a hearing next month.

Toward the end of last year, Stephanie retweeted an article from The Standard about the United Council of Human Services (UCHS), an organization that provides shelter and housing for the homeless, and has been accused of mismanagement.

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The City Comptroller’s Office and City Attorney’s Office turned UCHS over to the FBI and District Attorney’s Office for criminal investigation after the organization received over $28 million in grants. The Standard later discovered that the Attorney General’s Office had suspended UCHS as a non-profit organization in June.

“We really need people to not just hush up these contracts, people to actually read and really understand what we are asking them to do,” Stefani said.

Slow progress on some of the most intractable issues has led to calls for tighter controls on funds flowing out of the city’s coffers. In November, voters overwhelmingly approved Proposition C, creating a new commission to oversee the city’s response to homelessness.

The Department of Homeless and Supportive Housing had nearly $88 million in open contracts with nonprofits that had lost their reputation in the state as of December. This amount was more than in any other city department.

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