Dozens of uncashed checks. Expenditures that were not allowed. Tardiness in submitting quarterly performance reports. These are some of the issues found in an audit of local nonprofits providing housing assistance during the pandemic.
The San Jose Housing Department contracted with accounting firm Pun Group to track whether nonprofits complied with federal grant requirements. In fiscal year 2021-22, the department received $89 million in federal and state dollars for nonprofits to distribute for rent relief and economic assistance. PUN Group reviewed 44 grant agreements from during this period and found 27 lacked internal controls for ensuring that grants were being used properly, according to a city report released earlier this month. The findings show a number of nonprofits failed to disclose checks written to ineligible program participants.
The organizations reviewed in this sample include Habitat for Humanity, the Bill Wilson Center , LifeMoves , PATH, Law Foundation of Silicon Valley , Destination: Home, Sacred Heart , HomeFirst , JobTrain, Goodwill, First 5 of Santa Clara County, Catholic Charities and International Rescue Committee, among others.
Nearly every nonprofit in the audit sample submitted their quarterly performance reports late.
Uncashed Checks
Perhaps most surprising is that 153 checks from the Bill Wilson Center were not cashed or canceled. These checks should have gone to its clients during the pandemic. In addition, the audit found five households did not receive the services Bill Wilson Center reportedly gave them.
Josh Selo , chief executive officer of Bill Wilson Center, told San José Spotlight the organization has been implementing new training procedures and accounting systems since he became CEO last year. He replaced Sparky Harlan who retired after 40 years.
“We have an excellent track record of high level delivery on our contracts to all of our government contract holders and many, many years of clean audits,” Selo told San José Spotlight.
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Selo said he couldn’t comment on the compliance issues in question as he was not with the organization at the time, and the people who oversaw the grant programs are no longer there. He doesn’t know if any of the checks bounced or how much these checks amounted to, but the grant amounts in question total more than $3 million.
The report found several other organizations to have uncashed checks, including Habitat for Humanity , Bill Wilson Center, LifeMoves, International Rescue Committee , Law Foundation of Silicon Valley and PATH.
Ineligible Costs
Five organizations had “ineligible costs” totaling nearly $330,000 in which they asked the city for non-qualified reimbursements under the grant agreement, the report said. These organizations are Habitat for Humanity, Next Door Solutions, Destination: Home, Bill Wilson Center and First 5.
First 5 had missing documentation for bank reconciliations for three months of the grant. The organization also reimbursed three employees for business-related expenses, but two of the employees were missing personnel records, according to the report’s findings. In addition, six out of nine program participants at the agency did not meet grant requirements.
Jennifer Cloyd , chief executive officer of First 5, told San José Spotlight the organization couldn’t locate some of the bank reconciliations, but provided all bank statements to the auditor and identified all payments received under the grant. The two people with missing personnel records were employees of a partner agency, she said.
“We have since significantly modified and updated our accounting practices to ensure that all reconciliations are saved to our network,” Cloyd told San José Spotlight.
The report found Destination: Home had 30 ineligible participants in two of its programs that served 70 people. Some weren’t eligible because they lacked documentation for income loss, didn’t reside in the city or didn’t provide documentation of how they were impacted by the pandemic.
Ray Bramson, chief operating officer of Destination: Home and a San José Spotlight columnist , said he isn’t able to comment on their ineligible costs or participants because the organization hasn’t had a chance to review the findings.
“We’re very confident that while there may be room for improvement in terms of documentation, that we were serving the most vulnerable individuals throughout the community during a major crisis,” Bramson told San José Spotlight.
Other groups that had ineligible participants were Next Door Solutions , JobTrain, Bill Wilson Center and Sacred Heart.
Ineffective Management
A San Jose housing department spokesperson said that during the pandemic, the department didn’t have the right tools to effectively manage the federal grants.
“The department did not effectively manage or monitor the performance of the contract or communicate with the community partners to ensure compliance with the contract provisions,” Jeff Scott told San José Spotlight.
Scott said these findings are helping the department monitor whether organizations are meeting contract performance requirements.
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Earlier this year, state auditors found the city could not identify all of its expenditures on homeless support, nor does it adequately measure the effectiveness of its systems. It also found most of the city service providers have not yet received a performance report, despite costing the city millions of dollars in contracts. The city spent more than $302 million on homeless supportive services from 2020-23.
“Silicon Valley should be leading the nation on effectiveness on solving the problem of homelessness,” Todd Langton, executive director of homelessness nonprofit Agape Silicon Valley, told San José Spotlight. “Instead, we are one of the worst. No transparency, no accountability, very little collaboration between agencies and nonprofits.”
Nonprofits will have 30 days to dispute the findings, provide missing documentation, submit a correction plan or repay any ineligible costs after they receive a compliance letter.
Contact Joyce Chu at joyce@sanjosespotlight.com or @joyce_speaks on X, formerly known as Twitter.
The post Silicon Valley nonprofits mismanaged federal dollars appeared first on San José Spotlight .
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