Lo$t and ‘Fund’
City Hall nonprofit ripped in fed audit
The Mayor’s Fund, a nonprofit used to bolster causes backed by City Hall, violated regulations in spending $4.6 million in federal funds between 2010 and 2015 — in one case awarding $1.6 million to a “shell” company, an audit claims.
The report by the federal Corporation for National and Community Service (CNCS) questions the fund’s awarding of a job-creation contract to another nonprofit, Madison Strategies Group.
Madison, which did not meet the experience requirement for the grant, subcontracted the deal to Grant Associates, a for-profit company that would have been ineligible for the money, the report said.
“For the first year of the subaward [under Mayor Mike Bloomberg], Madison was essentially a shell, with all its activities conducted by Grant staff or consultants,” said the report, which recommended that all the questioned payments be returned.
It noted Grant’s president chaired Madison’s board and served as its executive director, with those posts flagged as conflicts of interest.
Madison Strategies Group received the funds as part of a national initiative known as a Social Innovation Fund, to test out employment training and placement programs in different cities.
The Mayor’s Fund received a $28.5 million Social Innovation Fund grant from the feds to cover its work from 2010 to 2015, including the awarding of a subgrant of $1.6 million to Madison for workforce projects in Tulsa, Okla.
The fund, whose full name is the Mayor’s Fund to Advance New York City, is now chaired by First Lady Chirlane McCray, who has run it since 2014. Neither she nor any other chair is singled out in the report.
City officials under Mayors de Blasio and Bloomberg — whose administration controlled the contract from 2010 to 2013 — denied any rule violations and said the relationship between Grant and Madison was approved by the feds.
The CNCS’s audit — which the federal agency launched because it originally gave the money to the city — also blasted the Mayor’s Fund for not conducting background checks on 165 workers at an intermediary nonprofit, MDRC, which helped manage the grants.
City officials argue that MDRC was exempt from the background checks because it acted as a consultant, not a partner, but some of the funding had been earmarked for conducting those checks.
“Accepting the position of the Mayor’s Fund and excusing the lack of criminal-history checks for MDRC would allow intermediaries to outsource their ongoing core grant management responsibilities to murderers and rapists by expediently labeling them contractors,” the auditors concluded.
The audit said the probability that the grants would be clawed back was “remote.”