Nonprofit Warnings Ignored While Money Misspent

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December 4, 2010; Source: New York Times | If you think all the scandals involving public money could be solved with more oversight, or even more whistleblowing, this is a cautionary tale. An article produced for the New York Times by The Bay Citizen, reports that officials in San Francisco, including the superintendent of schools, were warned repeatedly by community groups that something was rotten in how administrators were overseeing millions of dollars in district money meant for after-school programs. Only this past June, after hearing complaints for years from local nonprofit groups that state and federal money never arrived or that administrators ended their contracts without explanation, did officials take any action.

Now, according to The Bay Citizen, the district’s investigation has concluded that the people overseeing the distribution of funds for after-school programs funneled that money into “their personal bank accounts via community organizations.” In the wake of these findings, the San Francisco district attorney’s office has begun a criminal investigation.

The school district claims it acted immediately—including contacting law enforcement—when it received information about money disappearing. Yet, at least three former and current executives with community groups said they had been asking the district to look into how these funds were being managed—with no luck—since at least 2006.

For instance, Wesley Rich, vice president of operations at the Y.M.C.A. of San Francisco, said he met with officials administering after-school programs that year to ask why the district had pulled $200,000 that had been allocated to programs his group operated for the benefit of some 200 students. “There was really never any explanation,” he said. Separately, an executive with another well known nonprofit—who requested anonymity out of fear of his organization losing financing—had called attention to financial irregularities in the Student Support Services Department as early as 2006 to school board members and senior district administrators.

The article notes that the failure to take action was damaging enough to the programs and students served. But the combination of foot dragging and looking the other way has been compounded by the fact the district is currently facing some $113 million in potential cuts.—Bruce Trachtenberg