Speaker Quinn announces Council financial reforms

By David Freedlander, amNewYork Staff Writer
More stories | dfreedlander@am-ny.com

May 8, 2008

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City Council Speaker Christine Quinn announced broad reforms Tuesday to shore up a leaky budget process that has lead to a series of scandals involving the way the council funds nonprofits.

The initiatives, effective immediately, will force all nonprofits to go through a more thorough vetting process and calls for greater transparency in how council members allocate grants.

Quinn called the plan "a very significant step forward in the budget process. It is a level of review that I believe no other legislative body in the country has."

But several of the thousands of community groups who receive council funding and use it to feed the city's hungry, comfort its sick and care for its children say their good work is being ignored in the wake of the slush-fund scandal and worry they could suffer as the council seeks to repair its battered image.

"There is really nothing that has happened that shows that we need more regulation of nonprofits," said Michael Clark, president of the Non-Profit Coordinating Committee of New York, which represents 1,600 nonprofits in the New York City area. "It's about the city and the way they do contracting. All the things they have proposed sound lovely when you talk in broad generalities, but how many months will it delay what in some cases is just a chump change grant."

Last month it was reported that Quinn's office allocated money to fictitious nonprofits as a placeholder to disburse the money throughout the year. It has also been reported that some council members allocated money to bogus groups in the neighborhoods they represent, in some cases to nonprofits that had relatives of council members on their payroll. Two aides to Councilman Kendall Stewart (D-Brooklyn) have been indicted for skimming $145,000 to bogus nonprofits and the investigation threatens to grow.

To stem the political furor, Quinn announced that all groups would be pre-screened before the budget process begins to ensure that they are legitimate organizations and can do the work they are contracted to do.

Nonprofit execs say the scandal is topic A of conversation among their colleagues, and many fear that "nonprofit" is quickly becoming a dirty word, synonymous with graft and fraud.

"It is a subject of great concern," said Fred Scaglione, editor of New York Nonprofit Press, an industry newsletter. "Just a handful of questionable cases are tarnishing the image of all nonprofits, almost all of which are actually doing very good work under very difficult circumstances."

Council members annually dole out upwards of $20 million, usually in small grants, to fund everything from Little League uniforms to outings for the elderly.

But good government groups have labeled those allocations, called "member items," as pork, and argued that they should be eliminated, which nonprofits say would be devastate their ability to provide necessary services.

"We would hate to see the entire system dismantled because a few folks aren't doing what they are supposed to be doing," said Stephanie Pinder, executive director of the Lincoln Square Neighborhood Center, which received $3,500 from Councilwoman Gale Brewer (D-Manhattan) to fund an after-school program. "The vast majority of nonprofits are doing good work in the communities."

In response to the crisis, City Comptroller William Thompson announced that he was reviewing all contracts for member items over $5,000, and it was reported that he was blocking funds to several groups as they underwent review.

Many executive directors, though, say it already takes so long for the city to process their disbursements that they have to borrow from the bank as they await funds, and fear that an onerous process will only get worse.

"There are tens of thousands of citizens in need who could lose vital services," said William Rapfogel, executive director of the Metropolitan Council on Jewish Poverty, which services thousands of low-income New Yorkers. "We are transforming lives. We couldn't do it without council founding. It's as simple as that."

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Speaker Quinn announces Council financial reforms

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