NYC Political Funding Shenanigans with Hispanic Federation and City Council Speaker

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July 1, 2014; Crain’s New York

Getting discretionary grants from connected politicians might look like a neat mechanism for nonprofits to grab some extra funding, but the costs in reputation—for the nonprofits and, if they cared, the politicians—are sometimes considerable.

Take the case of the Hispanic Federation, established in 1990 with a half-dozen Latino organizational members covering New York, New Jersey, and Connecticut. The Hispanic Federation’s founder, Louis Miranda, is now a powerful New York political lobbyist. His firm, MirRam Group, gets paid well by the Federation, $680,000 for what was described as “consulting” in 2012 alone. Miranda is also the chief political consultant to New York City Council Speaker Melissa Mark-Viverito.

Is it any surprise that the Federation landed $1.3 million from the City in what Crain’s calls “pork-barrel funding,” including “more than $830,000…from a newly created program funded by monies directly under Ms. Mark-Viverito’s control.” After all of the criticism in recent years of City Council members’ grants to their favored nonprofits, outside of any avenues of open competition, Mark-Viverito seems to have reversed the process. Crain’s reports that the Council Speaker has personal control of $16.6 million of what appears to be $50 million in Council grant funds for favored nonprofits. Mark-Viverito’s spokesperson claims that there was substantial support among council members for the money for the Hispanic Federation, but the optics indicate that regardless of the support of her colleagues, the funding looks like the discretionary funding that has long been a problem and that Mayor Bill de Blasio himself has called for ending.

Will nonprofit leaders call out the Federation and Mark-Viverito? The Council Speaker has crafted an effective strategy for insulating the $833,333 from some avenues of criticism. According to Crain’s, it is from a program under the Speaker’s control called the Communities of Color Non-Profit Stabilization Fund. Also receiving grants from the Fund, each of them $833,333 apiece, are the Coalition for Asian American Children and Families and the New York Urban League.

Grants from the City totaling $1.3 million is not insignificant to the Hispanic Federation. Its total revenues in 2012 were only $4.3 million. Last year, the Federation’s entire grant support from the city was “only” $307,000, and that was above the level of earlier years when Mark-Viverito had not yet been elected council speaker.

The Crain’s article notes several of MirRam’s other priorities that intersected with the nonprofit and the council speaker, including Miranda’s recruitment of both to join him in advocating with the Federal Trade Commission against global nutrition company Herbalife, reportedly because one of his clients wanted to buy the firm. That may be odd, but more interesting is the Hispanic Federation recently making efforts to build stronger relationships with state Republicans and joining a lawsuit against former Mayor Michael Bloomberg’s “soda ban.” It is worth noting that one of Miranda’s clients was Coca-Cola, hardly a fan of the troubled policy, and the past president of the Hispanic Federation, Lillian Lopez-Rodriguez, left the job to become Coke’s Hispanic Affairs Director.

Last month, Angelo Falcón issued a scathing critique of the relationship between the Hispanic Federation and its founder-turned-lobbyist. A longtime Latino activist in New York (full disclosure: Falcon was on the board of directors of the National Committee for Responsive Philanthropy when this writer was NCRP’s executive director), Falcón writes, “José Calderon, the current President of the Hispanic Federation, was…characterized by me as a ‘witless bag man’ for MirRam. While his supporters argue that he is a good guy and honest, he has presided over what many see as a corrupt relationship between his organization and MirRam in the two years he has been the Federation’s head.”

 

 

Charging that the relationship between the Hispanic Federation and Miranda and his firm has brought unnecessarily negative publicity and criticism, Falcón says that Calderon has responded by attacking Falcón for allegedly “working against increased funding for Latino nonprofits.” Falcón further suggests that the Federation, now with 97 Latino organization members, is dominated by corporations. He reports that the board of the Federation has only one nonprofit member—from the City University of New York, surprisingly not a representative of one of the Latino service providers—with the remainder all from the corporate sector, at least two that use Miranda’s lobbying services.

Amidst the critiques of the nexus of the Hispanic Federation, Miranda/MirRam, and Speaker Mark-Viverito, there are at least three issues that all nonprofits, wherever they are, should be able to connect with:

  1. In the environment of political grantmaking like the grants that come from New York City Council members, it is a hugely un-level playing field. There is no open competition for the grants, and only those nonprofits with the resources to pay tens or hundreds of thousands of dollars to lobbyists like Miranda/MirRam are able to have a shot at these discretionary grants. There’s no question to us about the solution. We agree with Mayor de Blasio; it’s time to end these political grants.
  2. The world of lobbyists and the world of campaign operatives have merged. Miranda is part of both. The fact that lobbyists and campaign operatives are increasingly indistinguishable means that the lobbyists’ political influence over their clients—like Miranda’s over Mark-Viverito—add a disturbing and unfair dimension to the competition for government money. The inexorable risk is that nonprofits will be increasingly compelled to engage in electoral politics, risking their 501(c)(3) status to “win” at the government grants game.
  3. Falcón’s criticism of the Hispanic Federation’s domination by corporate players is also exceptionally troubling. A couple of corporate reps on a nonprofit board are fine. A corporate advisory board established for fundraising purposes is not atypical in the slightest. But a federation of nonprofits completely governed by corporate functionaries has lost its roots. A federation should be governed by its federated members—in this case, Latino nonprofits, not corporations.

Ultimately, the problem of the Council Speaker’s grant to the Hispanic Federation involves the intersection of politics and nonprofits, with transparency and accountability left on the sidelines as politicians give discretionary grants to favored nonprofits linked by lobbyists and campaign operatives. The Hispanic Federation may be $1.3 million richer today because of Mark-Viverito and Miranda, but nonprofit accountability and probity may be poorer.—Rick Cohen

 


 

José Calderon, President of the Hispanic Federation, sent us the following letter as a response: 

I write to correct several misstatements of fact and address the tone of innuendo and rumor that characterized a recent piece written for the Nonprofit Quarterly (NPQ) by Rick Cohen entitled, “NYC Political Funding Shenanigans with Hispanic Federation and New York City Council Speaker.” While I take issue with the entirety of his work, I want to address three issues particularly:

  • Mr. Cohen has cast the relationship between a Latino-led organization and its Latino-led lobbying firm as improper and disreputable when, in fact, it is neither. Like hundreds of other nonprofits, we contract a lobbying firm because doing so allows us to maximize our voice and advance policies important to our community. It serves the interests of our organization and, more importantly, the Latino community-based organizations that we advocate for and support. We comply with the requirements of the New York City Lobbying Commission including the filing of reports on spending and lobbying activities. Mr. Cohen clearly did not bother to read these reports or do any independent fact checking. How else to explain his grossly inaccurate statement that Hispanic Federation paid our lobbyist $680,000 in consulting fees in 2012 when, in fact, we paid them a total of $63,000 in lobbying fees?
  • The Communities of Color Nonprofit Stabilization Fund (CCNSF) is the result of a three-year long effort by dozens of Black, Latino and Asian-led social service providers designed to address the structural deficiencies that plague and often undermine the nonprofit sector in communities of color. The process by which we secured funding for this project—which included many months of providing testimony and participating in hearings and meetings with individual and delegations of Council Members—was exhaustive, transparent and in accordance with the new rigorous and inclusive budget policies established by the New York City Council. Mr. Cohen’s assertions that funding for the CCNSF is a case of backroom politics is not only insulting to the work of the broad coalition of diverse and highly respected nonprofit organizations that crafted and advanced this vital initiative, but also proof that he has little understanding about the historical funding inequities facing people of color-led nonprofits and the extensive grassroots campaign that delivered this great victory for our communities.
  • Mr. Cohen also assails our Board of Directors by claiming that, “a federation of nonprofits completely governed by corporate functionaries has lost its roots.” First and foremost, the HF Board of Directors is an engaged, committed and active group of individuals who are woven into the community through their background, experience and work on behalf of Latinos. The composition of our board is and has always been a strategic decision on our part about how best to serve our member agencies. One of the stark truths facing Latino nonprofits, including Hispanic Federation, is that we do not receive a fair share of government or private philanthropic investments. This long standing inequality means that our board of directors not only provides fiduciary and programmatic oversight but must also be able to raise significant additional resources to support our work and mission. Nevertheless, as important as our board of directors is, we have been and remain a membership-driven organization. Through daily exchanges, regular meetings, advocacy campaigns and the multiple issue-focused coalitions we’ve developed, our agency leadership informs and drives all of our major public policy positions. Just last year, for example, we conducted a series of meetings and forums with our member agencies to draft a Latino action agenda that was presented to Mayor Bill de Blasio and the New York City Council to guide their work with our communities. In short, our strength as an institution comes from our familial and interdependent ties to our community-based organizations. Those roots are as strongly connected to the Latino community as they have always been. To suggest otherwise is to be cynically and seriously misinformed.

Mr. Cohen never contacted me or anyone at the Hispanic Federation to respond to any of his allegations. If he had done so he might have avoided the glaring errors and misinterpretations that I have detailed above. It is unfortunate that the NPQ would allow itself to launch attacks against the Hispanic Federation and its partners. I expected more from the NPQ and its national correspondent.

 

 

  • Wayne

    This is a problematic article that uses analysis by another publication and another community leader’s opinion to make three recommendations that are misguided. The Communities of Color Nonprofit Stabilization Fund was a joint initiative among Black, Latino, and Asian nonprofit umbrella organizations, and $833,333 that the three organizations will each receive will be regranted to member agencies. It should be noted that organizations of color receive a miniscule amount of funding from foundation, corporate, and government sources. The three recommendations are naive at best and flawed at worst. First, foundation, corporate, and individual donations are made to nonprofits based on relationships, not solely on competitive application processes, so City Council discretionary funding is based on similar relationships. Discretionary funding is not pork, but the meat and potatoes of nonprofit organizations which address important challenges in their communities. Smaller nonprofit organizations may not be competitive for government RFPs, so discretionary funding benefits organizations that serve and represent vulnerable communities. Second, 501(c)3 organizations are allowed to lobby according to IRS guidelines as long as it’s not a substantial part of their programs (less than 15% of operating budget). So advocating for government funding does not put a 501(c)3 at risk as long as they comply with lobbying reporting. Third, nonprofit boards are responsible for governance, strategic, and fiduciary duties of a nonprofit organization. Having board members who hold the nonprofit accountable, raise needed funds, and oversee policies is the measure of a strong board, not what sector (corporate, nonprofit, government, etc.) these board members come from. A mostly corporate board is fine as long as an umbrella organization gets meaningful input from member agencies.

  • Zafarrano Wolffe

    Especially in the education field and particularly in the realm of charter schools, the phrase “non-profit” seems to endow a type of sainthood on all involved. A behind-the-blue curtain look, however, may reveal a sausage factory.