Nearly one-quarter of nonprofits receiving the most lucrative contracts from San Francisco are out of compliance, with four rated as concerning due to outstanding financial reporting issues, according to a Dec. 19 report from the city’s controller.
More than 250 issues across 46 nonprofits were singled out in the controller’s 2023 report as failing to comply with a variety of things, but mostly issues related to financial document management.
Those monitored—197 in all—either received $1 million or more from at least one city agency or at least $200,000 from two or more departments.
In fiscal year 2022–2023, the City and County of San Francisco paid $1.7 billion in contracts to more than 600 nonprofits—an increase of about $300 million from the prior year—according to the report.
Services provided include those related to homelessness and housing, behavioral health, and workforce development, among others.
“Nonprofit organizations under contract with the City deliver some of the most critical services supporting residents in great need,” Mr. Rosenfield said in a press release announcing the report, but some are falling short of maintaining proper accounting records per state and federal requirements.
Four contractors were given “elevated concern” status one step below the most severe “red flag” status, which can result in defunding.
Those singled out have received contracts totaling more than $604 million over the years, according to city records.
Two organizations related to homelessness and housing that inspectors found concerning due to a lack of compliance were HomeRise—awarded nearly $9 million since 2022—and the Bayview Hunters Point Foundation for Community Improvement—which has received nearly $229 million in grants since 2010.
Also of concern is the African American Art and Culture Complex, with 13 standards related to financial audit statements noted as non-conforming. Located in the historic Fillmore district, the institution has received more than $40 million from the city since 2017.
Last year, one homeless housing and substance abuse organization that has had nearly $327 million in contracts with the city since 2010, was red flagged, but addressed some issues allowing its status to improve to elevated concern, according to the report.
With compliance issues for some persisting for years, some supervisors earlier this year demanded better oversight.
“I’ve long thought that we need to do a much better job of evaluating the programs and services the city funds and whether they meet the city’s needs,” Supervisor Catherine Stefani said during a February San Francisco Board of Supervisors meeting. “We want to make sure that those taxpayer dollars are being spent wisely.”
Citing numerous issues related to one housing nonprofit in particular that continues to be funded by the city, she said the board has a responsibility to manage the situation.
“And now we’re still doling out about $60 million to a nonprofit that has several complaints against it [and] has financial issues,” Ms. Stefani said during the meeting. “Yet we’re still doing business with them. We’re still contracting with them.”
The controller’s office did not respond to a request for comment on deadline.
