How to Kill a Nonprofit

Calvin Swinson believes in living his life by the book. He worked as an accountant for many years, but has since retired, and now spends his days traveling or "simply relaxing locally," he says, because that's what retirees do. He still wears round spectacles, held over from his days tabulating long columns of figures to make sure the numbers added up. He keeps his white hair cut short around the perimeter of his bald, black pate. He chooses his words carefully, checking the balance of his sentences as if he were putting his thoughts to paper.

Proud of the comfort he had earned from a life of virtue and hard work, Swinson says he wanted to help the next generation find similar success when he made his fateful decision three years ago to join the board of directors of a nonprofit called the Urban Economic Development Corp.

The organization helped fledgling minority-owned businesses by assisting them in getting loans and offering advice and technical expertise. The program appeared to be an ideal opportunity for Swinson to invest in the young entrepreneurs of his neighborhood in the Western Addition. He saw it as a chance to give something back.

But Swinson's idealism was short-lived. He says he soon discovered that the nonprofit's managers were in some cases inept, in other cases quite devious. Overall the organization failed miserably to assist the community it was intended to serve. After accepting almost $800,000 from the federal government to help minority-owned businesses get a leg up in the local market, the nonprofit squandered the money. Almost a quarter of the grant went into the salaries and benefits of the project director, his girlfriend, and his daughter. Most of the rest went into serving a handful of favored clients, brought over from the project director's consulting business in the East Bay.

Swinson says he was shocked by what he saw and tried to put a stop to it. But after questioning the nonprofit's practices, he soon found himself at odds with the organization's leadership. When he pressed matters, his colleagues shunned him, then concocted a story, according to Swinson, to smear the retired accountant's reputation. But Swinson's concerns were well-founded, and though he was essentially banished from the organization, the federal government would continue his inquiry, initiating what would evolve into a criminal investigation of the Urban Economic Development Corp.

A federal civil audit of the organization, not yet released to the public, tells a story of how a local nonprofit strayed from its mission and, in doing so, cheated the community it was intended to serve. The UEDC's executive director has tried to portray the city's subsequent cutoff in funding as political retribution, when in fact his agency had a history of mismanagement. The organization's derailment also serves as a cautionary tale of how cynicism and complacency have tainted the federal government's efforts to promote minority opportunity programs, making such failures far too common.

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Swinson first heard of the Urban Economic Development Corp. through an old acquaintance by the name of Andrew Jeanpierre. When Swinson retired in the late 1970s, he sold his accounting practice to Jeanpierre, "a young man from Louisiana struggling to make ends meet," and the two stayed in touch. Swinson left the city shortly after the sale and didn't come back until 1995. When he returned, he says he was surprised to find Jeanpierre had become a regular man about town. "He had gotten involved in politics and had become very well known," he says. "It was a real rags-to-riches story."

The young man Swinson once knew had taken a post as president of the San Francisco Airport Commission under then-Mayor Frank Jordan. His accounting firm, Jeanpierre & Co., had grown, and had won many lucrative city contracts. Jeanpierre's name often appeared in the newspapers -- though not always for the best reasons. In 1996, the city Controller's Office found that Jeanpierre had submitted an inflated bill for services on a federal grant given to the Municipal Railway. Jeanpierre submitted a new bill without admitting any wrongdoing. A year later, according to newspaper reports, Jeanpierre agreed to pay a $3,000 fine to the California Fair Political Practices Commission after he made illegal cash contributions to Jordan's unsuccessful re-election campaign.

Jeanpierre invited Swinson to join him on the board of directors of the Urban Economic Development Corp. in the spring of 1997. Swinson accepted the offer and quickly earned the respect of his fellow board members. Within a few months he was elected chairman of the board. Swinson says he had the time to throw himself into the job, and there was much to be done. Just six months before, the organization had won a two-year, $818,000 grant from the U.S. Department of Commerce, in addition to the roughly $350,000 it had received from the city's Redevelopment Agency and the Mayor's Office of Economic Development. Swinson believed the nonprofit had an obligation to repay the government's largess with hard work.