September 26, 2011; Source: New York Times | It continues: The New York Times has added a new chapter to the continuing saga of charges that Seedco, the well-known and highly respected nonprofit economic development intermediary, has been falsifying records to generate numbers to bolster its job creation numbers on City contracts. In August, Times reporter Michael Powell published an exposé on Seedco staff altering client histories so that the organization could falsely claim credit for past jobs as jobs found with Seedco’s help. Seedco rejected Powell’s findings and the City government quickly gave Seedco a “satisfactory” get-out-of-jail card concerning the charges—though after some publicity, the Department of Investigation has initiated a more detailed review of the organization’s practices.

Now, Powell has generated a follow-up piece.  He says that “Seven former Seedco employees say managers encouraged employees to produce hundreds, even thousands, of fake job-placement numbers over several years.”.  One of the staff said, “The falsification of this data was not a mistake, nor was it an accident…It was endemic.”

Among the techniques used by staff to juice the employment numbers, users of Seedco’s tax-filing service would be asked if they would fill out forms to say that the had found jobs through Seedco. In another instance, one staff person reported going to companies like Costco and Target and asking employees there to sign that Seedco had helped them. Staff were told, according to one, “to get placements by any means necessary,” even if that meant falsifying records.

The pressure was on, according to these seven, to generate numbers.  Powell wrote, “Managers applauded high producers, and handed out movie tickets, fruit baskets and Starbucks vouchers. They berated those who fell short.” 

In response to NPQ‘s initial coverage of Powell’s Seedco analysis, a Seedco spokesperson posted this comment on the Newswire article:  “Seedco conducts all of its work with integrity and a deep commitment to advancing economic opportunity for those in need. We dispute the negative assertions in the original article and the unfortunate recounting here of those uninformed assertions.”  However, conditions have changed in only a few months.  The relatively new executive director of Seedco, Barbara Gunn, told Powell that she and her staff are putting serious effort into guarding against falsification of job placement data.  The City’s Small Business Services department has developed some backbone and disallowed 44 percent of Seedco’s reported placements so far this year.  In contrast to the blanket “satisfactory” conclusions about Seedco a few months ago, the Small Business Services commissioner told Powell that  “The allegations are simply not acceptable. . . . What makes me angry is that it’s become a shell game.”

Knowing that NPQ Newswire would cover Powell’s story, the Seedco spokesperson sent us an e-mail note saying the following:

“Seedco has taken the concerns described in Powell’s column extremely seriously since we learned of them last spring. In addition to completing an internal audit of job placements, we re-trained staff to be sure they understand how and what is required for reporting the work. We also put into place additional quality assurance steps, and reiterated to staff Seedco’s Code of Conduct. The central tenet of the Code of Conduct is honesty, and we have never—and will never—tolerate anything less.”

One hopes this shift in Seedco’s approach toward more openness to Powell’s assertions that there are some problems in the system (attributed to center directors trying to meet placement quotas, not attributed to Seedco’s senior staff) that need to be fixed, demonstrates a commitment to root out the problem.  These charges tarnish Seedco’s otherwise laudatory history of accomplishment over the years. 

But do recognize another factor as well.  Government agencies and the nonprofits they fund are often engaged in ever-escalating numbers games.  Like the old Fannie Mae under Franklin Raines, where the hysterical pressure was to meet escalating production targets by deadlines so that board members and executives could score lucrative bonuses, it seems like Seedco might have fallen prey to pressuring its center directors to meet job placement targets or else risk withering scrutiny regarding why this sector or that one fell short of the performance that others were achieving.  When human-service delivery shifts from improving people’s lives to generating impressive number counts, social policy is in trouble.—Rick Cohen