Monday, April 28, 2008

New York City Council's Use of Nonprofits Questioned

The New York Times reports on the unfolding investigations of the New York City Council's funding for nonprofit groups.  It states the trigger for increased scrutiny from both city and federal officials was the revelation last month that the Council had been parking money that it would then spend outside of the normal budget process by using the names of fictitious groups.  Council members also appear to have funded nonprofits that are staffed by their aides and serve at least in part to pass city funds through to organizations chosen by those members. 

The article focuses primarily on "Libre" or the Latino Initiative for Better Resources and Empowerment Inc., which it linked to Council member Hiram Monserrate from Queens.  Libre is not registered with the New York Attorney General as a charity and has not filed a return with the IRS for at least two years, although its long-time Treasurer and now executive director said the required IRS returns would be filed by the end of May.  Libre claims to provide recreation and education programs as well as other assistance to Queens residents, but most of its expenditures appear to have been for rent, utilities, and printing.  It also has a city contract to distribute $32,000 to other community groups.

The article also cites the recent indictment of two aides to Councilman Kendall Stewart of Brooklyn.  The indictment alleges they embezzled $145,000 from a city-funded nonprofit group that they ran.  One city agency denied Councilman Stewart's request for funding for the group, named the Donna Reid Memorial Education Fund, when it noticed that it was based at the home of his chief of staff.  But another city agency approved a subsequent request for funds.

LHM

http://lawprofessors.typepad.com/nonprofit/2008/04/new-york-city-c.html

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