City-funded Shelter Providers Criticized for Nepotism, Bloat, and Double-Dipping
City-funded shelter providers collecting millions of dollars to provide shelter to a near-record number of homeless New Yorkers are rife with nepotism, bloated executive pay, and double-dipping, according to an extensive report released by the city’s Department of Investigation on Thursday.
Executive Pay
The 94-page report took a deep dive into the finances of 51 of the city’s largest nonprofit shelter providers and found that all of them had at least one issue of concern, while several had multiple red flags investigators brought to the Department of Homeless Services.
Current city regulations require nonprofits doing work with the city to have "reasonable" executive compensation, with no specific threshold for what reasonable might be. The report pointed to five of the nonprofits where executives raked in more than $700,000 annually, and another eight where executives earned more than a half a million. The report flagged two such nonprofits with striking executive pay; CAMBA Inc. where president Joanne Oplustil earned more than $750,000 in fiscal year 2022, and the Acacia Network where president Raul Russi took in $935,391 that fiscal year.
Nepotism
City rules are supposed to prevent nepotism by barring nonprofit executives from hiring members of their family without written permission from the Department of Homeless Services. But DOI found nonprofit shelter providers nonetheless did so. The group Black Veterans for Social Justice, which operate nine active shelter contracts worth $370 million, initially told DOI investigators it didn’t have any immediate family members of senior executives or board members on its payroll. But the DOI later found two adult children of the president and CEO Wendy McClinton had worked at the nonprofit since 2007. One of those children was also collecting a DHS salary at the time they were employed by the nonprofit, the report found.
Double-Dealing
The report also laid out a number of instances where nonprofit executives were double-dipping, collecting additional cash by hiring subcontractors in which they had a financial stake. Those subcontractors provided food, security, and other services at the shelters they managed. In one example, the nonprofit SEBCO Development Inc. — which has about $35 million in city shelter contracts — hired a for-profit security company it also owned, allowing executives to collect hundreds of thousands of dollars in salary payments from the security company — funded through the nonprofit city contract.
Conclusion
The DOI report highlights a pattern of abuse and waste in the city’s homeless shelter system, where nonprofit providers are prioritizing their own interests over the needs of vulnerable New Yorkers. The report’s findings are a stark reminder of the importance of effective oversight and accountability in the use of public funds. It is crucial that the city takes concrete steps to address these issues and ensure that taxpayer dollars are being used to benefit those in need, not to line the pockets of nonprofit executives.
FAQs
Q: What did the DOI report find in its investigation of city-funded shelter providers?
A: The DOI report found that 51 nonprofit shelter providers had at least one issue of concern, including nepotism, bloated executive pay, and double-dealing.
Q: How many nonprofits were found to have executives earning more than $700,000 annually?
A: Five nonprofits were found to have executives earning more than $700,000 annually, and eight were found to have executives earning more than a half million.
Q: What is the current city regulation regarding executive compensation?
A: The current regulation requires nonprofits doing work with the city to have "reasonable" executive compensation, with no specific threshold for what reasonable might be.
