Nonprofit Execs Get Rich Off Homelessness

San Francisco spends tens of millions of tax dollars on high salaries at large charities, yet it builds very little housing for homeless people. The vast majority of money pumped into nonprofits goes not to food, shelter or housing for homeless people, but to the salaries of managers and directors.

 

Pigeons swirl past a homeless man asleep on the grass along Geary Street in San Francisco.  Lydia Gans photo

Pigeons swirl past a homeless man asleep on the grass along Geary Street in San Francisco. Lydia Gans photo

 

A Raising Our Voices investigation

Street Spirit, January 2001

by T.J. Johnston, MaryAnne Greb, Adrian Varnedoe, Michael Morgan, and Delfine Brody

Voters frequently tell pollsters that homelessness is San Francisco’s foremost problem. In response, politicians spend their days dumping money into social service programs designed to help street-dwellers — and more cynically, policing strategies designed to drive them out of town. Indeed, homelessness, or rather voter dissatisfaction with the city’s approach to the issue, helped topple mayors Art Agnos and Frank Jordan.

Yet for all the soundbites and fury, we know remarkably little about the extent of the crisis of increasing homelessness — or how effective the city’s response to it has been. Nobody in city government knows how many homeless people there are in San Francisco. And estimates on how much taxpayer money is spent to address homelessness vary wildly.

San Francisco officials have long played a manipulative game with statistics regarding the shopping-cart set. To the local media, city officials downplay the number of homeless people; when seeking federal funding they use another, far larger figure. Throughout most of the 1990s, city staffers, under oath, told the U.S. Department of Housing and Urban Development that 14,000 to 15,000 homeless people were living here. During the same time period, Mayor Willie Brown’s staff repeatedly put the number at 4,000 to 6,000, in interviews they gave to the San Francisco Chronicle and Examiner.

In recent months, Mayor Willie Brown’s point person on homelessness, George Smith, in the midst of doing a census of the unhoused, has put the figure at 5,000. Meanwhile, speaking out of the other side of their mouth, city officials claimed that San Francisco has 12,500 homeless people in their application for federal funding in the year 2000.

City officials have little notion of how much money is going into homeless service programs. In 1994, Board of Supervisors Budget Analyst Harvey Rose said the city spent $31.1 million addressing homelessness. But a couple of years later, another city document looking at that same period, the 1996 Continuum of Care report, put the figure at $82.7 million.

Where does that money go? Public perception is that millions of taxpayer dollars go directly into the pockets of roofless people. While some money does go directly to homeless folks via General Assistance (the city welfare program that provides a meager monthly stipend for single homeless adults), far more goes to nonprofit agencies to provide social services like job training, mental health counseling, and drug rehabilitation.

Raising Our Voices examined the financial records of 15 of the city’s biggest homeless-serving nonprofits and found that the vast majority of the money pumped into the nonprofits goes not to food, clothing, or housing for homeless people, but to the salaries of social workers and managers. The top execs at the city’s biggest homeless-focused charities typically earn more than $100,000 annually.

An examination of public documents, including IRS filings and city audits, puts Alfonso Acampora, the executive director of Walden House, a drug rehab operation, at the top of the salary heap. In fiscal year 1998, the most recent year for which records were available, Acampora brought in a hefty $254,533 in total compensation. Only the salary of San Francisco AIDS Foundation chief Patricia L. Christen, whose pay was $188,119 in 1998, rivals that figure.

Last year Catholic Charities of San Francisco paid each of its top five execs more than $100,000. HomeBase, a nonprofit with a $420,000 total budget, spent roughly $100,000, nearly a quarter of its total overhead, paying its executive director, Martha Fleetwood.

Other expenses, such as travel, conferences, lobbying and fundraising, also raise eyebrows. IRS records show that Catholic Charities spent $385,007 on travel and conferences in FY ‘98; Walden House spent $312,735 on travel; and the S.F. AIDS Foundation spent $1 million on lobbying expenses and almost $4 million on fundraising. Our curiosity piqued, Raising Our Voices followed the paper trail to the offices of the nonprofits themselves.

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In July, 2000, the Palace of Fine Arts hosted a graduation ceremony of a different sort. The new graduates weren’t wearing funny hats or clutching diplomas, and nobody was telling them to go into plastics — they were celebrating their successful completion of drug and alcohol rehabilitation. Walden House, the state’s largest substance-abuse treatment program, was welcoming its grads into a brave new, clean and sober world.

Most had started with nothing, coming from the streets or jail. Ninety-eight percent of the people who enter the program, according to Walden House Foundation Director Chris Canter, are low- or no-income upon admission — the lack of a stable environment is often a byproduct of their addictions.

Walden House began humbly in 1969 as a safe house for runaways in San Francisco’s Haight-Ashbury District, ground zero of that decade’s counterculture. Today, half of Walden’s caseload is in San Francisco, with the rest spread throughout California. Along with residential and outpatient programs for adults, Walden’s services also include treatment for prison inmates, adolescents, adults with HIV and mental health issues, and also job-skills training.

In San Francisco alone, Walden operates seven facilities. In its three decades of existence, ever-expanding Walden House has seen 20,000 people complete its programs; and it boasts of its alumni’s accomplishments as any school or college would. Canter, himself a graduate of the adult program, regales listeners with the story of a 19-year-old homeless woman who completed the program and eventually won a full scholarship to Harvard and earned her Ph.D. in psychology — she now runs a 780-bed treatment facility at Corcoran State Prison.

“I know our CEO has been criticized for his salary, as have those in other nonprofits,” Canter said. “I think they should be evaluated on a case-by-case basis. I think nonprofits should be held accountable.”

Asked about Acampora’s major league salary, Debbie Lowis, vice president of administration, told us the money is well spent. Acampora’s quarter-million salary “is a bargain… for a $50 million organization.” (Walden, however, has a budget of less than $22 million.)

“In order to attract officers in the nonprofit world, I think you have to provide comparable salaries just as you would in a for-profit organization,” Canter opines. Acampora’s salary, and most of Walden’s budget comes from the public trough in the form of state and city funds. The rest comes from donations. (“We never ask for donations,” says Canter.)

Walden’s budget for fiscal year 1998, according to IRS filings, totaled $21,895,832. How much does Walden do for its clients on almost $22 million? By Canter’s estimates, “Walden House reaches between 8000 and 10,000 individuals each year through direct services and case management services. On average, 52 percent of program participants successfully complete an “episode” of treatment — episodes defined as a specific Walden House program, i.e., 90-day care, etc. Of those who successfully complete treatment, 75 percent remain clean and sober, crime-free and have secure housing six months after treatment.”

And what of the remaining 25 percent? “Unfortunately, it’s unclear as these people have not responded to the follow up surveys,” Canter replies. “This could be attributed to this being a very transitional population and the lack of affordable housing forces them out of the city or Bay Area.”

 

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Billy James Hensley (at left) and Peter Armstrong, both Vietnam veterans, enjoy a moment in the sun at United Nations Plaza. Pat Mazzera photo

 

The surveys to which Canter refers are written or telephone follow-ups conducted by Walden staffers at six- and twelve-month intervals after a client completes a program. Its questions pertain to sobriety, employment, and housing. “Many people who come through Walden House don’t remain homeless,” maintains Canter.

Judging by the S.F. Health Department audit of Walden for FY ‘98, $13.1 million of its budget is devoted to salaries and benefits, by far the largest slice of the pie.

The program in 1998 spent $398,000 on “client costs.” What, exactly, constitutes a client cost? According to Vida Jalali, fiscal director for Walden, they cover BART and MUNI passes for Walden-related transport (to and from sites, group meetings, doctor appointments), ID cards provided by the DMV, lab fees for blood tests and urinalysis, medication bought over the counter and by prescription, supplies for educational or vocational training, in-house and field trip activities (including reunions in adolescent facilities), and group counseling. Walden even takes the tab for cable fees, snacks and materials for holiday activities (like decorations for Thanksgiving and Christmas).

“All costs are to the clients’ direct benefit,” maintains Jalali. “That’s why the auditors group this under ‘client costs.’” She also insists that other items in the budget, such as consultant and professional services, transportation and vehicle costs, and printing and silk-screening supplies, are for services provided to clients.

“All of our growth in recent years,” adds Canter, “is in incarcerated treatment. These prison-based treatment programs do not require additional client cost expenditures. All participants are in-custody, all needs are provided for by the institution.”

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Catholic Charities, one of the city’s biggest homeless-focused nonprofits, is busy cleaning its own house in the wake of widely-reported expense account scandals. After the charge card shenanigans of former honcho Frank Hudson, which resulted in his ouster and a massive decline in donations for the organization — the nonprofit has hired Brian Cahill as interim CEO. Cahill recently sent out a mass-mail apology to the organization’s donors for the “violation of stewardship” by the previous regime. The mailing cites the damage-control measures the nonprofit has taken, including firing executive officers and eliminating several lavishly compensated executive positions.

“We’re a responsible nonprofit agency,” says Cahill, “providing services to a very vulnerable community through donations, through government money that requires us to be really good stewards of other people’s money. That means low overhead. That means all money goes where it’s supposed to go. They’re not supposed to go to fancy restaurants.”

Cahill also finds other expenses — like the $134,000 spent on travel and $250,000 on conferences — “totally unjustifiable.” In Hudson’s day, Catholic Charities execs would get approval for jet rides and hotel stays from fellow managers; now those expenses must be approved by the group’s board of directors. An investigative report by the board has been sent to the state Attorney General’s office, confirming reports of runaway spending.

The news of Hudson’s poverty pimping was leaked to the media by disgruntled staffers, who according to rumor, wore latex gloves while photocopying damning documents for the press. “I don’t know any details,” responded Cahill when asked about the whistle-blowers, “but whoever did that ought to be commended. I think they showed real courage and commitment to the organization.”

The organization, meanwhile, will continue to operate Guerrero House, a 17-bed facility for otherwise homeless young folks that was slated for closure before Hudson left. Tere Brown, Operations Director for Family and Children’s Services, has high hopes for Catholic Charities’ reorganization: “I think it’s terrific. It’s a great change. It takes us back to what we do.”

“I would have done some things differently,” mused Hudson about his trail of fiscal scandals and ultimate downfall, in a recent S.F. Chronicle interview. “On a personal level, I would not have allowed myself to be subjected to unjustified criticism. But I wouldn’t call them regrets, I would call them lessons learned. People for their own reasons like to say nasty things. But I don’t hold any animosity toward anybody.”

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While the city can’t decide exactly how many residents are homeless, or how much money is being spent to help them, our local bureaucrats can provide some fairly telling information. A look at the internal documents of the Mayor’s Office of Housing is quite illuminating. The untold millions San Francisco spends each year on “people-fixing” programs — drug rehab, job training, mental health help, etc. — are bound to go, in large part, to waste.

That’s because the city is refusing to get to the root of homelessness: a severe lack of housing. Over the past ten years, the population of this crowded little town has exploded by some 75,000 people, increasing from 723,959 in 1990 to an estimated 799,000 today. That decade saw a net housing gain of 6,614 units — next to nothing — according to reports from the Mayor’s Office of Housing.

Add to that the mass infusion of well-paid dot-commers which has — to restate the obvious — driven rents for the few available apartments into the stratosphere. Thanks to the high tech boom, San Francisco’s median household income has surged from a 1990 level of $33,481 to a current high of $50,000, meaning homeless folks trying to get off the streets are locked in a Darwinian battle for super-scarce shelter with a burgeoning caste of upper-crusters. Any bets as to who’s winning that contest?

“San Francisco has the tightest and most expensive housing market [in California],” acknowledges Marcia Rosen, head of the housing office. “The problem is bad all over, but the city response is that we devote over $100 million a year to affordable housing development.”

But, as the housing office admits in its Year 2000 Consolidated Plan, that money hasn’t made a dent. And when it comes to building housing specifically for homeless people and others labeled “extremely low-income” by the federal government, the city has failed miserably. Since 1996, the local government has built a whopping 73 units for homeless and very poor folks, a number that includes 50 temporary shelter beds. Only 102 more units are in the pipeline, though according to the plan more than 12,000 homeless people need a permanent place to live.

There seems to be a sort of cognitive dissonance looming over San Francisco City Hall. Sure, it’s crucial to help street-dwelling people conquer their demons — whatever they may be. But to spend millions treating homeless people’s maladies, only to leave them without the possibility of finding reasonably-priced shelter, is an exercise in futility.

This article was written by the unhoused journalists of Raising Our Voices, a training program conducted by Media Alliance from 2000-2002 that taught investigative reporting and research skills to homeless and low-income people.

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