San Francisco Seeks to Boost Transparency in Contracts With Nonprofits

San Francisco Mayor London Breed rallies supporters of Vice President Kamala Harris in front of City Hall on July 22, 2024. Travis Gillmore/The Epoch Times

Hoping to restore faith in city contracting after several nonprofits were found noncompliant this year, the San Francisco Board of Supervisors will consider new legislation known as “Comprehensive Contract Reform” during its weekly meeting on Sept. 10.

If approved by the board, the proposal would prevent city contractors from using grant money for political activities—with rules mandating they keep separate accounts; create strict boundaries for staff time, resources, and facilities; and disclose activities shared with political organizations.

The use of city funds for lobbying, advertising, and media relations spending would also be prohibited.

Businesses and nonprofits would be barred from receiving city contracts or grants if they fail to comply with competitive solicitation rules.

No contractors would be allowed to use city funds to sue San Francisco, and the city would have the right to block future contracts for those who break the rule.

Introduced by Mayor London Breed and City Attorney David Chiu, the legislation—co-sponsored by Supervisor Catherine Stefani—is meant to provide “oversight, accountability, transparency, and controls” to better manage contractors and grantees, while ensuring that grants are awarded fairly and protecting taxpayer money, according to a Sept. 3 press release.

The mayor also signed an executive directive ordering “Good Government Reforms” effective Sept. 3 to strengthen contract oversight processes.

To facilitate more effective audits, the guidelines direct city departments to standardize practices, establish fair grant award processes, refine monitoring policies, and improve record retention.

According to the directive, new regulations were necessary because of recent cases where nonprofits and grant awardees were found to have misused funds, failed to pay workers, and requested reimbursement for improper activities.

“The overwhelming majority of grantees serve the public with ethics and integrity, but city departments must be vigilant to guarantee that appropriate procedures are followed and the city does not spend funds on inappropriate purposes,” the mayor’s directive reads.

Breed said she, City Controller Greg Wagner, and Chiu are committed to rooting out those who break the law.

“Misconduct from those that would wrongfully take advantage of city resources has not been tolerated during my administration, and these new efforts expand on this commitment,” Breed said in the press release.

Chiu said he is grateful for the work of city investigators and will continue focusing on identifying and holding accountable those organizations that fail to comply with existing laws and the new regulations.

Assemblymember David Chiu (D-San Francisco) speaks about the tenant-protection law that took effect on Jan. 1, 2020. Courtesy of Assemblymember David Chiu

“Those who undermine our contracting processes and exploit public resources are not welcome to do business with our city and will be held accountable,” Chiu said in the press release.

A sponsor of the new legislation said the proposal and the mayor’s directive will improve the city’s nonprofit contracting processes.

“San Franciscans deserve a city government that responsibly manages their tax dollars and ensures that city services are delivered effectively and reliably,” Stefani said in the press release. “This executive directive is a crucial step toward restoring and strengthening the public’s trust in our city government.”

In November, San Francisco voters will vote on Proposition C, which would create the position of Inspector General in the city’s Controller’s Office to open and lead investigations meant to uncover waste, fraud, and abuse.

All 11 members of the city’s Board of Supervisors filed official statements in support of Prop. C.

“San Francisco has a chance to join other major American cities who have an inspector general,” the statement reads. “Based on the arrests over the last year, we need one.”

The arrests include more than two dozen over the past decade that resulted from investigations spearheaded by the FBI and led to corruption convictions of several nonprofit leaders, corporate lobbyists, department heads, and elected officials.

One opponent critical of the measure said it would create “more bureaucracy” by installing an unelected inspector general.

“Proposition C is a power grab designed as reform,” attorney Larry Marso—a self-proclaimed advocate for fiscal responsibility—said in a statement filed in opposition. “We’ve seen these ‘reforms’ before. They promise to clean up City Hall, yet the problems deepen.”

He said the mayor, city attorney, and District Attorney Brooke Jenkins should be held responsible for the fraud and other wrongdoings that occurred under their watch.

“San Francisco doesn’t need unelected officials with unchecked power. We need accountability for our leaders we already have,” Marso said. “This is more of the same—a distraction from the real work of holding civil servants accountable.”

On the state level, California voters will decide in November whether to approve a ballot measure seeking to improve accountability and government transparency.