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SFPD poised to cut contract of scandal-ridden SF SAFE nonprofit
After revelations that longtime SFPD partner SF SAFE misspent public funds, stiffed contractors and lost its good standing with the state’s nonprofit registry, the department is threatening to terminate its contract with the organization.
sfstandard.com
San Francisco police poised to cut contract of scandal-ridden SF SAFE nonprofit
SFPD sent a letter to SF SAFE earlier this month with a series of questions that followed up on a Controller’s Office report that found that the nonprofit under Kyra Worthy, right, wrongly spent about $80,000 of taxpayer funds. | Source: Gina Castro/The Standard; Courtesy San Francisco Examiner
By Noah BaustinUpdated Feb. 16, 2024 • 3:00pmPublished Feb. 16, 2024 • 11:45am
The San Francisco Police Department is threatening to terminate its contract with SF SAFE, the troubled nonprofit partner it has worked with for decades, after a series of financial scandals in the past month revealed that it misspent public funds and stiffed its vendors.
SFPD sent a letter last week to SF SAFE with a series of questions that followed up on a Controller’s Office report that found that the organization wrongly spent about $80,000 of taxpayer funds on luxury gift boxes, limo rides and a Lake Tahoe trip, Diana Oliva-Aroche, SFPD director of policy and public affairs, announced at a Board of Supervisors hearing Thursday.
On Friday, SFPD spokesperson Evan Sernoffsky said the department was working with the Controller's Office to see if SF SAFE had responded to its demands.
"If they have not, we will move forward with termination of the contract," Sernoffsky told The Standard.
During that same hearing, Supervisor Aaron Peskin raised the specter of another issue that may put SF SAFE’s city funding in jeopardy: The group’s nonprofit status is listed as delinquent with the California Attorney General’s Registry of Charities and Fundraisers. California nonprofits that fail to submit their annual filings to the state and enter delinquency should be blocked by law from receiving funds.
The termination threats come on the heels of damaging revelations about SF SAFE and its leadership. After the Controller’s Office report was released in January, multiple subcontractors of the nonprofit came forward saying they had been bilked out of payments. The organization’s board of directors subsequently fired Executive Director Kyra Worthy on Jan. 24, and the District Attorney’s Office confirmed an ongoing criminal investigation into SF SAFE.
It’s not the first time Worthy was accused of misspending money: A 2017 investigation by the West Contra Costa Unified School District found that the nonprofit she led before joining SF SAFE submitted false invoices, and the district demanded the return of nearly $235,000
Since learning of the Controller’s Office findings, SFPD conducted its own review of SF SAFE’s spending and identified about $95,000 in ineligible expenditures by the nonprofit, the department's former CFO, Patrick Leung, said during the Thursday hearing.
SF SAFE did not reply to requests for comment on this story.
SF SAFE Executive Director Kyra Worthy, left, speaks as Supervisor Aaron Peskin, center, and SFPD Chief Bill Scott talk in the background in San Francisco's Chinatown on Jan. 11, 2023. | Source: Courtesy SFGovTV
The San Francisco Office of Economic and Workforce Development also has an active contract with SF SAFE, though it has not drawn the same line in the sand as SFPD.
“We have not determined that we are going to close the contract as SFPD stated,” the office's Executive Director Sarah Dennis Phillips said during the hearing. “Only because we are working with the city attorney to make sure that when we do so, we have exhausted all our remedies to get those subgrantees paid,” she said, in a nod to the vendors who’ve reported getting bilked by SF SAFE.
It’s unclear whether the two city departments contracting with SF SAFE issued payments to the nonprofit while it was tagged as delinquent by the state, which could potentially run afoul of city and state policy.
The California Attorney General's Office website states that SF SAFE’s registry expiration date was Nov. 15, 2022, which means it was delinquent. Both SFPD and the Office of Economic and Workforce Development have dispersed funds to the firm since then, including $1.5 million during the current fiscal year, according to the city’s contractor payment database.
But SF SAFE was not on a list of delinquent nonprofits that the Controller’s Office sent out to city departments in February 2023, an Office of Economic and Workforce Development spokesperson said in a statement. When that office was preparing to award SF SAFE a grant in March 2023, the nonprofit’s status was listed as “Current—Awaiting Reporting,” which meant that it was in the process of fixing its delinquency with the state, the spokesperson said.
When nonprofits enter California delinquency, it means they have failed to file their annually required paperwork outlining their financial activity.
A photo illustration shows a mug branded with the SF SAFE logo on the Olive Gift Co. website. | Source: The Standard
City policy allows departments to withhold payments from delinquent nonprofits if they’re aware of the noncompliance with state regulations, but the Office of Economic and Workforce Development was not made aware of noncompliance by SF SAFE and continued to issue payments, the spokesperson said.
The California Attorney General’s Office did not reply to a request to clarify the exact timeline of SF SAFE’s delinquency status, which would reveal when it was not authorized to receive public funds.
In January 2023, an investigation by The Standard found that San Francisco had active contracts with nearly 140 nonprofits that had failed to comply with state registration requirements. Those contracts were worth over $300 million. The next month, the city announced a new policy explicitly stating that San Francisco is not authorized to continue doing business with nonprofits that had lost their good standing with the state. It gave city contractors until June 30, 2023, to fix their statuses.
It was during that same month when SFPD Chief Bill Scott first requested the Controller’s Office to look into SF SAFE based on confidential sources telling police that the nonprofit was not paying its bills, Oliva-Aroche said at the hearing.
Peskin slammed SFPD for failing to catch the nonprofit’s misconduct earlier. [insiders]
“This is obviously an embarrassment, not only to the [police] department, but to the city,” he said.