Saturday, September 5, 2009

Star's Editorial Applauding Stimulus Money Going to Non-Profits Misses the Mark

This morning the Indianapolis Star editorial praises the federal stimulus money going to 20 local non-profits.
The use of federal stimulus dollars to revive the wheezing economy can be a problematic, even wasted, effort if care is not taken to target the assistance.

That lesson appears to have been applied to the handling of a $5.86 million stimulus grant to help with homelessness in Indianapolis.

Twenty community-based agencies, all monitored by United Way of Central Indiana, will share the money and direct it to identified needs. Those needs have become crystal clear and glaringly enlarged, as the recession has robbed marginal families of jobs, savings, health insurance and shelter. "A paycheck away from homelessness" is a well-established saying, and thousands of those paychecks have lately gone away.

The stereotypical homeless -- men with addictions and mental illness, living on the streets -- are not the growth category nationally or locally. Recent head counts here have found a decline in that population while the number of families living in shelters, in their cars or "sofa surfing" with relatives and friends has skyrocketed. Add to that the many who are housed, but standing on the brink of eviction.

That's the economy. When it turns around, the unexpected homeless and near-homeless stand ready to get back to work, find a long-term school for their kids and maintain an address.
To bridge the gap, they need a variety of services; and they need money -- money to meet the rent where they're living, money for rent and security deposits where they have to move.
Shelter may be one of his constituents' "most basic needs," as Mayor Greg Ballard said in announcing the grant; but there's nothing simple about meeting that need.

Housing searches, child care, health services, legal counsel -- all the necessities of negotiating a complex environment appear to be covered by the variety of agencies on board to apply the stimulus.
The roster is one of familiar names, ranging from HealthNet and Horizon House ($478,800 and $433,860, respectively) to Flanner House ($303,000) to Children's Bureau ($227,000) to Indiana Legal Services ($100,000).

If the needs are covered, so are the providers. United Way has been assigned to track the flow of money, and the grantees must use no more than 5 percent of it on administrative expenses as opposed to services. Grants will have to be recertified every three months.

Accountability. Focus. Local savvy. If government intervention in the economy is going to be effective, it would do well to equip itself with these tools.
As any regular reader of my blog knows, one area of emphasis for me is these non-profit corporations that claim they are serving a worthy cause, but when you take a closer look at their finances, you find that they exist chiefly to pay their officers and high-ranking employees outrageous salaries and benefits. Very little of the money actually trickles down to the mission supposedly served by the non-profit. Some of the offenders outed on this blog include Indianapolis Downtown, Inc., the Arts Council of Indianapolis, Inc., the Indianapolis Convention and Visitor's Association, and the Indiana Sports Corporation.

One of the worst offenders I stumbled upon was the Indiana Children's Bureau which provides services for at risk youth. Salaries listed on the Children's Bureau's 2007 tax return include:
Ron Carpenter, $178,298, President & CEO

Janice Klein, $114,168, Executive VP & COO,

Clara Anderson, $109,280, Executive VP & CAO

Susan Meyer, $104,566, Executive VP & CFO

Jon Bennett, $103,812, Executive Vice President
The Children's Bureau, which received over $11 million in government support in 2007, listed nine other officers making between $77,000 and $65,000. The Children's Bureau paid out $7,519,831 in salaries and benefits in 2007.

A closer look at their tax return shows the Children's Bureau has accumulated assets of $7,844,420 by the end of $2007.

But wait, isn't the stimulus money supposed to be monitored by the United Way and that only 5% of it can be used for administrative expenses? That means absolutely nothing. When you have tens of millions in unrestricted money and you're given a couple hundred thousands in restricted money, the restricted money simply acts to free up more of the unrestricted money to be used for administrative expenses such as salaries. The non-profit doesn't have to spend one more dime on the worthwhile service than it did before the grant.

Given its reputation as a spendthrift, one to has to wonder about the propriety of making United Way the watchdog of these non-profits. Several years ago, an expose of United Way revealed their executives were riding around in limousines, making lavish salaries and spending extravagantly. The expose hurt the United Way's reputation for years. Looking over the United Way of Central Indiana, Inc.'s 2008 tax return, one wonders whether the non-profit ever learned its lesson. Ellen Annala, President & CEO of United Way of Central Indiana, made $213,955 in salary in benefits in 2008. Three other officers made over $130,000. Three other employees are listed between $90,000 and $100,000. United Way of Central Indiana spent $5,740,814 in salaries and benefits in 2008 and has an incredible $127 million stocked away in accumulated assets. This is exactly why I never will contribute a dime to the United Way of Central Indiana.

The Star missed the mark in this editorial.

See also: Profiting Off Of Indianapolis' Non-Profit Corporations (Monday, June 22, 2009)


Unigov said... the run up to the deal to build the Colts a new stadium, the Colts enlisted support of myriad groups to help push for $650 million of taxpayer money to be spent on this wacky purpose.

The United Way was part of this group, called the "Colts Business Alliance".

In other words, the United Way advocated for the waste of taxpayer money on a new palace for the Colts.

So like you I will not support the United Way - they're part of the cabal that has run this city into the ground, and that has caused billions to be spent on lavish construction projects instead of on quality of life.

Colts Business Alliance members (large URL):

Includes the Indiana Department of Education, the City of Indianapolis, ISTA, IUPUI, and the YMCA. That's right, a bunch of non-profits lobbied for the new Colts stadium - and thus, against help for the poor.

Downtown Indy said...

I think having their tax-free operating status is 'stimulus' enough!

Paul K. Ogden said...

Interesting Unigov. That makes me wonder whether the United Way might be skirting some laws. Contributions to the United Way can be deducted on your taxes. However, the money received by United Way should be used for charitable purposes, which would not include promoting a new stadium for the Colts.

Advance Indiana said...

I used to work at a place that basically coerced employees into making United Way donations through payroll deductions. If I want to give to a charity, I'll make the contribution directly to that charity. That's the only way to do it in my judgment. The United Way historically exercises poor judgment in its distribution of funds and the process becomes highly-politicized. Let charities appeal directly to people for their contributions; it makes them more accountable. And I would never contribute to most of those groups on that list, Paul.


I just found out today that our in-house charity at the office is donating through United Way. I had to let them know I can't give anymore unless it is for a project that gives directly to the source of need.