Examiner Editorial: Getting our money’s worth from nonprofits

The city and county of San Francisco has been spending just under a half-billion dollars annually to fund some 841 nonprofits. We rely on these community-based groups for a vast array of social services — substance abuse treatment, homelessness, violence abatement, job training, psychological counseling, after-school programs, day care, medical clinics and much more.

By any standard, a half-billion dollars — nearly half of San Francisco’s discretionary budget — is a tremendous amount of money. And it doesn’t end there. San Francisco is in charge of distributing almost $1.1 billion worth of state and federal grants per year to our local nonprofits, according to a 2009 civil grand jury report.

With so much money being given away to help the most struggling residents overcome their difficulties, one would think San Francisco taxpayers ought to be entitled to have transparent audits ensuring that their tax dollars deliver real value. This doesn’t just mean checking the accounts to see if the nonprofits are handling our money honestly. Perhaps even more importantly, it means tracking the results of service programs to measure if genuinely effective outcomes are being produced.

Historically, City Hall has focused too little oversight on the platoons of nonprofits — especially on the all-important tracking of outcome effectiveness. It has long been widely recognized that political influence plays too big a role in winning contracts to provide community services.

However, as San Francisco’s budget becomes increasingly battered by consecutive years of massive deficits, political will finally appears to be gathering to bring the disbursements to nonprofits under stronger municipal oversight. The Controller’s Office was tasked with bringing in independent inspections of the nonprofits’ work in two major activity areas — substance abuse treatment, for which $50 million is spent annually, and youth-violence prevention programs in San Francisco’s five most troubled neighborhoods, which costs $10 million.

These new studies are intended to improve the  framework for measuring outcomes of services throughout all sectors where nonprofits are active. It would put tools in place to better judge a program’s success by more efficiently keeping tabs on client recidivism rates. This sort of information could guide funding decisions that deliver more value for years to come.

Some obstacles to gaining better municipal oversight of the nonprofits’ finances are easily visible. Nonprofits are contracted by different city and county departments and there seems to be insufficient central accounting authority on a daily basis.
At the same time, there also seems to be too much duplication of services among nonprofits. Five smaller agencies with duplicate administrative staffs carry a bigger combined overhead than one larger agency would need.

The San Francisco Examiner doesn’t dispute that under many circumstances, nonprofit contractors can deliver social services less expensively than the city and county. But with all the cash bestowed on nonprofits in good faith, San Franciscans should have a right to be confident that their tax dollars are working.

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