Conflict of Interest Forces Defunding of Silicon Valley Nonprofit

Print Share on LinkedIn More



February 5, 2014; San Jose Mercury News

The East Palo Alto City Council has rescinded a $77,000 grant to two local nonprofits because a councilmember didn’t abstain from approving it last fall, even though his wife worked for one of the organizations, reports the San Jose Mercury News.

Councilmember Larry Moody didn’t mention he might have a conflict of interest when the council awarded the money to New Creation Home Ministries and Able Works last November. The money came from a tax approved by voters to reduce violence and improve public safety in this working-class Silicon Valley suburb.

Moody’s wife is a parenting class coordinator at New Creation Home Ministries, a “Christian ministry serving young mothers” ages 13 to 22. The City Attorney determined that Able Works, the other nonprofit, could reapply for the money as long as New Creation Home Ministries wasn’t a partner. The newspaper reports that after rescinding the original grant, the council voted to give about $74,000 to Able Works and its two new nonprofit partners.

This time, Moody abstained from the entire discussion after stating he had a conflict of interest due to ties with all three organizations. He didn’t explain this time around why he voted to award the grant in November, but he told a reporter that he didn’t realize back then that he had a conflict of interest. “I do now,” he added.

This episode points out the importance of monitoring conflicts of interest between nonprofit service providers and their funders, especially when the money comes from public sources. While it is good for organizations to develop and maintain close ties to government administrators and elected officials, they still need to be at arm’s length.—Larry Kaplan