Newsom-Linked Non-Profit SF Connect Twice As Inefficient As National Average

Sixty-two percent of budget spent on overhead in 2006

San Francisco spends a small nation's budget on and around the problem of homelessness. Numerous programs sprawl over multiple bureaucracies, each with differing missions, and different levels of coordination and effectiveness.

San Francisco's Human Services Agency, which oversees public assistance programs for the poor, has a 2007-2008 fiscal-year budget of $814 million. The Department of Public Health, whose programs include indigent health care, substance-abuse treatment, street outreach teams, and other programs targeting the needy, will spend $1.3 billion this fiscal year. Public housing, in essence an antihomelessness program, is funded with federal and local money, with $215 million coming this year from San Francisco's city budget, and the mayor proposing to spend another $700 million rehabbing buildings. More cash goes to pay paramedics and police who respond to the significant portion of calls caused by chronic substance abuse and life on the streets. Additional staff are associated with Care Not Cash, the Homelessness 10-Year-Plan Council, the Mayor's Interagency Homeless Cabinet, Homeless Connect, Communities of Opportunity, the Office of the Vice Mayor on Homelessness, and other once-hyped, long-forgotten, still-lingering initiatives that make the city's total homelessness expenditures the subject of boxes' worth of accounting ledger paper.

But for all the money spent, visitors to San Francisco can't help noticing indigents begging on Market St., hollering nonsense on Sixth St., camping under freeways, getting high in empty lots, sleeping in doorways and parks and on benches and curbs, and otherwise living lives bereft of dignity and comfort.

So it made a certain kind of sense when Mayor Gavin Newsom's office announced a staff shakeup January 4 that included appointing new homelessness czar Dariush Kayhan. According to a press release, Kayhan will "direct the city's homelessness policy by coordinating with multiple city departments."

What didn't make sense, however, was that the man assigned this gargantuan task was until last week the director of a Newsom-linked nonprofit, SF Connect, that during its short existence appeared to suffer from the same set of maladies that make our city's homelessness bureaucracies an opaque, ineffective mess. Kayhan ran a corporation that has been operating unlawfully since August, and whose public filings suggest it did an ineffective job providing services to the poor. The nonprofit is currently reassessing "its priorities and goals," according to former Newsom campaign manager Alex Tourk, who has stepped in to oversee it. He would not explain, however, why such reassessment was necessary.

SF Connect Inc. was founded in early 2006 as a nonprofit agency designed to recruit private donors to broaden Newsom's city government Homeless Connect program, which helped volunteers bring services to the poor and homeless.

The agency was launched a year before the mayor's re-election campaign, and seemed to help revive public interest in his signature issue. Newsom personally encouraged wealthy individuals and foundations to donate money in $10,000 and $25,000 chunks. His then–deputy chief of staff, Tourk, was tagged to help launch the project. SF Connect hired Kayhan as executive director because he had previously overseen housing and homelessness programs in the city's Human Services Agency. By year's end, SF Connect had raised $803,939 with an eye toward creating a local version of the first President Bush's "thousand points of light."

SF Connect would extend Newsom's Homeless Connect program, whereby city employees ran periodic service fairs at Bill Graham Civic Auditorium to leverage philanthropic donations and build volunteer spirit. SF Connect planned to expand this concept by attracting volunteers to improve the environment, help poor people be more tech-savvy, and provide aid to families with children.

"We're saying give us your time, give us your passion," Newsom said of SF Connect in August 2006. "Give us your unique quality of imagination. Give us your skill set — give someone else some hope."

Volunteers recruited by SF Connect doubtless helped provide indigent people with hope. But the nonprofit's public filings suggest that its former director did not deliver performances that might inspire hope about the future of city services.

SF Connect's accounting record shows that its ability to channel donor money into services bordered on gross inefficiency, as measured by guidelines published by nonprofit watchdog Charity Navigator.

On its 2006 IRS Form 990, a public information form designed to help potential donors evaluate charities' effectiveness, SF Connect reported that it spent a total of $508,099. Only $191,270 of that went toward program services: The rest was spent on fund-raising and management expenses, meaning SF Connect spent less than 38 percent of its donations on its core activity of running service fairs for the poor.

I spoke to a staffer at Charity Navigator in Washington, D.C., who directed me to a section of its Web site that reads: "Our data shows that 7 out of 10 charities we've evaluated spend at least 75 percent of their budget on the programs and services they exist to provide. And 9 out of 10 spend at least 65 percent. We believe that those spending less than a third of their budget on program expenses are simply not living up to their missions. Charities demonstrating such gross inefficiency receive zero points for their overall organizational efficiency score."

Notwithstanding Charity Navigator's unwavering tone, public filings don't tell the entire story. And experts say it's possible that an organization like SF Connect could look lousy on paper, yet actually perform important work.

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