One of San Francisco’s largest housing providers for formerly homeless people “misused” millions of dollars in taxpayer funds, helped itself to fat bonuses, and made sketchy moves that “heightened the risk of fraud,” according to an audit released on Tuesday.
“The breadth and magnitude of financial and compliance problems we found at HomeRise is concerning,” Sjoberg Evashenk Consulting, an independent firm the city hired to audit the nonprofit group, wrote in its report. The firm also described HomeRise’s use of public funds as “wasteful” and “uncontrolled.”
San Francisco nonprofit groups receive hundreds of millions of dollars to provide services to some of the city’s most vulnerable residents, including those who are homeless or struggling with mental illness and addiction. In recent years, nonprofit groups in the city have come under increased scrutiny for fiscal mismanagement.
There have been numerous complaints about how HomeRise runs its organization.
By fiscal 2020-21, various city departments that had worked with the nonprofit group raised red flags about its “performance and viability.”
HomeRise CEO Janéa Jackson addressed the findings in the audit and said its leadership is “100% committed” to resolving the problems. She also said she has already addressed several of the ones highlighted in the report.
HomeRise operates more than 1,500 units at 19 properties across San Francisco. It has an annual budget of about $34 million and 250 employees. The city’s contracts with HomeRise total more than $240 million in loans, grants, and subsidies. This includes $110 million in loans to develop or rehabilitate properties, $90 million for operations and maintenance, and more than $40 million in grants for support services.
According to the audit, HomeRise’s questionable practices ended up diverting funds that could have otherwise gone toward tenant services or fixing facilities. HomeRise also handed out 20% pay raises to some of its employees despite a slow cash flow. It also paid out more than $200,000 in bonuses and created three new corporate housing positions without considering the financial impact.
“Diverting any portion of city funding to questionable uses when it’s earmarked to benefit residents is careless and irresponsible,” Controller Greg Wagner said. “No matter the extenuating circumstances, HomeRise had an obligation to ensure public funds were managed appropriately.”
HomeRise was blasted by residents last week during a hearing at city hall for contributing to violent and disturbing incidents at its complex in Mission Bay. The city backed HomeRise, but there have been other disturbing allegations about nonprofit groups that have inked lucrative contracts with San Francisco over the past three years.
The city’s district attorney’s office is investigating the finances of SF Safe, a nonprofit group accused of misusing San Francisco Police Department funds.
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The city is also investigating the operator of Providence Foundation of San Francisco, a nonprofit homeless shelter, for alleged wage theft and labor law violations.
In February, the United Council of Human Services and its chief executive were sued by a former site manager who claimed the director used money to live a lavish life while drug use and prostitution were going unchecked at its housing program.