The ‘soft corruption’ of City Hall’s secret $2 million grant fund

Council’s Philadelphia Activities Fund is one of the least-watched pots of money in the city — despite years of abuses.

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Danya Henninger / Billy Penn
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Each year, City Council’s 10 district legislators quietly divvy up a multi-million dollar chest of money to favored community groups in their neighborhoods, free from oversight.

The Philadelphia Activities Fund — often called simply “The Fund” — exists for the overbroad purpose of supporting “people and communities through projects that promote sportsmanship, the arts, and health.” But who receives the grants is a matter of secrecy. Unlike other publicly funded grants programs, taxpayers are kept in the dark about the winners of these $500 to $7,500 checks, much less made aware of the applicants who get snubbed.

The application process is equally opaque and ripe for politicization. Want to boost your chances? It helps to know people in high places.

For example, Councilwoman Cindy Bass. Over the past few years, the Northwest Philadelphia lawmaker has awarded two grants totalling $15,000 to EDGE Community Development Group, a self-described nonprofit that does youth mentoring, holiday toy drives — and the occasional political fundraiser for the district councilwoman.

EDGE got its first grant right around the time of a 2015 fish fry held in support of Bass — just weeks after the organization’s president, Tyrone Barge Jr., left to join the councilwoman as her chief of staff.

The money from that and the later payout funded mentorship for at-risk African American youth in the district, according to the office. “These are not the children that enjoy the luxuries of the private schools within my district,” Bass said in a statement.

Both lawmakers and administrators in the Department of Parks & Recreation, where the money is officially stored, downplay the Fund’s laissez-faire operations in favor of its community benefits — with some even calling to expand the largesse. The overwhelming majority of grants do appear to support legitimate programming. But a careful look shows many opportunities for conflict of interest.

In recent years, Bass wasn’t the only lawmaker who gave out grants to political allies through the $2 million piggy bank.

Councilwoman Jannie Blackwell’s office distributed $14,000 to Southwest District Services, records show. It’s a prominent organization that the councilwoman admitted had thrown her fundraisers in past years, and whose board had been chaired by her aide Saboor Muhammad — until his departure following an ethics conflict.

Barring a promise for services in exchange for it, council members are legally free to hand out the money as they see fit. But Patrick Christmas, policy director for good government group Committee of 70, calls the insider dealing “very problematic.”

“In other parts of city government we have strong rules to make sure tax dollars are being spent in a thoughtful, deliberate way,” Christmas said. “For politicians to be able to dole out public money in this way without any degree of transparency, you could call it a form of soft corruption.”

Grant records obtained by Billy Penn show more than just the Fund’s continued legacy of political favoritism.

Councilmembers routinely helped finance dubiously qualified mentorship programs, gave extra to multi-million dollar nonprofits that already receive city money, and even funded myriad for-profit businesses in their districts. Other beneficiaries won grants for an incongruous array of activities, from block party DJs to motorcycle training to a “predatory lending task force.”

Councilwoman Cindy Bass (center) with her aide Tyrone Barge (to her left) and other EDGE affiliates at a September 2015 fundraiser in Germantown

Councilwoman Cindy Bass with her chief of staff Tyrone Barge (second to left) and other EDGE affiliates at a September 2015 fundraiser in Germantown

EDGE Community Development Group/Facebook

No one follows the money

Sometimes referred to as Council’s “walking around money,” the Fund was established in the 1990s to replace an earlier, scandal-ridden program called “Class 500” grants. This newer iteration has financed ward leaders, Mummers clubs, private businesses, and even non-existent nonprofits with virtually no accountability for how the dollars gets spent.

It’s tough to even attempt to measure the impact of the 1,000-plus grants distributed each year. Why? No one actually follows the money.

Like a Matryoshka doll, the Fund’s $2 million annual cashpot is actually nested deep within the Department of Parks & Recreation’s annual operating budget, where it is then diverted to a separate, tax-exempt entity for disbursement. Nearly all funding requests are passed along directly from councilmembers to a seven-person board — which includes Parks officials and three seated lawmakers, among them Bass and Blackwell.

Nearly all requests are approved. And despite perennial budget slashing, Council has preserved the Fund’s coffers over the years, even at the expense of other Parks services.

Officials tend to praise the fund’s virtues and downplay its flaws. Kathryn Ott Lovell, commissioner of Parks & Recreation, describes it as a low-barrier way for shoestring organizations to finance activities without tons of bureaucratic red tape — a quick way to evidence tax dollars at work.

“Many of these groups are initiating programs and activities that are in our centers and in our parks,” she told Billy Penn. “A holiday jamboree or a jazz concert — it really makes a big difference.”

While stating that the overwhelming majority of grants go towards legitimate community activities, Ott Lovell acknowledged the Fund’s bylaws are outdated and open-ended. However, she said, her office had not received any complaints.

“If people want to behave badly, they find a way to behave badly. I don’t know of any sort of restrictions to prevent that from happening,” Ott Lovell said. “But in the three years that I’ve been in this position, I haven’t heard from organizations that feel they’ve been treated unfairly.”

The board asks recipients to submit an annual report detailing how they spent their grants; only a handful actually do it.

“The reporting process isn’t as efficient as we’d like it to be,” Ott Lovell said. “Right now, it’s more of a request.”

District 10 Councilman Brian O'Neill and Parks & Recreation Commissioner Kathryn Ott Lovell

District 10 Councilman Brian O'Neill and Parks & Recreation Commissioner Kathryn Ott Lovell

PHL Council

Rules are made to be broken

Meanwhile, the scope of the already ambiguous program appears to have gotten more diffuse in recent years. Plus, for every rule professed on paper, records show exceptions abound.

Despite its original purpose to support parks-related programming, the grant is now open to anything that provides “skills training” or “learning or motivational experiences.” Dozens of grants between 2016 and 2018 went to uncertified “reentry” and “mentorship” groups, some run by LLCs established by a single individual. A number of recipients claimed 501(c)(3) status, yet the financial filings required from a nonprofit do not appear in the IRS database.

Advocates depict the Fund mainly as a support strut for underfunded neighborhood groups, but grants also went to large nonprofits with multi-million dollar budgets — some of them already city-funded, and many with politically wired board members.

And while the rules state that only nonprofits, governmental agencies, and their subsidiaries may apply, dozens of for-profit businesses are regular benefactors from the Fund, including a Spanish-language newspaper and a 17-year-old’s film production company.

Some organizations received grants are virtual ghosts, with no websites or phone numbers to date. Councilman Curtis Jones awarded $5,000 to once such company, Zaza Film Media & Entertainment, for a motorcycle safety program.

“Specifically he used his activity grant money to teach motorcycle awareness and safety to young adults,” Joshua Cohen, Jones’ chief of staff, wrote in an email. “He does other things within that company but grant was specifically used for that program.”

Councilwoman Quiñones-Sánchez, a vehement backer of the Fund, compared it to councilmanic prerogative, the heavily criticized tradition that gives council members informal authority over land sales in their district. She believes voters entrusted their district leaders to distribute land and money as they see fit.

“That’s what people vote for — for you to make decisions,” she said.

“I think we should have more money,” she added. “Look what I do with a quarter million. Imagine what I would do with half a million?”

Some uses of the program seem to highlight bureaucratic failures elsewhere in City Hall. Quiñones-Sánchez gives annual grants to a Puerto Rican softball league to help them pay permit fees for renting city-run athletic fields — effectively returning Parks & Recreation’s own money back into its coffers.

“I literally give them money so they can pay the city,” she said.

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Jacob Colon/PHL City Council

“Why does this program exist?”

Council members also routinely use the Fund to bolster religious groups and houses of worship, which are seemingly at odds with the city’s Fair Practice law.

District 6 Councilman Bobby Henon awarded more than 30 grants to Catholic institutions with “Saint” or “Our Lady Of” in their names. Are you leading a Boy Scout troop in Councilman Brian O’Neill’s neighboring Northeast Philadelphia district, or part of an Archbishop Ryan sports club? You’re virtually guaranteed some grant money. (O’Neill, who chairs the Activities Fund board, did not return repeated phone calls and emails.)

The full list of recent grant recipients shows that in the name of community activities, pretty much anything goes: $4,000 to a “predatory lending task force” (Councilwoman Cherelle Parker), thousands more to addiction recovery groups, annual allowances for the oft-protested Columbus Day parade in South Philly (Councilman Kenyatta Johnson).

But as the program stands, taxpayers don’t know anything about what happens to the money, leading critics to speculate that Council prefers it that way.

“Why does this program exist?” Christmas, from the Committee of 70, wondered. “There is a case to be made that very small organizations need funding through an accessible process, but we have to have balance — and the pros need to outweigh the cons.”

As with the councilmanic prerogative debate, Christmas doesn’t see Council voting away its power. But he says the best we can hope for is that “the politics be above board.”

For starters, publishing the applicants and grant winners each year.

Unlike the Philadelphia Cultural Fund, which began posting its beneficiaries online in 2016, the Activities Fund still keeps the curtains drawn on the grant records, save for inquiring reporters. And due to the split authority over the Fund, both sides are able to shirk responsibility: some Council members say the onus is on the administration to publish their selected grant winners; Parks claims it is but a humble administrator.

Rather than pushing for more sunshine, Council has done little beyond widening the scope of the grant. The sole update the legislative body made to the program in recent years was to increase the maximum grant threshold from $6,500 to $7,500. Meanwhile, the Fund’s own bylaws are so outdated they still advertise a $5,000 cap.

In the past, fiscal watchdogs have feigned mild interest in auditing for abuses in the fund. It’s a nominal sum in the scope of the city’s vast budget, and district councilmembers’ guard their “walking around money” tooth and nail.

City Controller Rebecca Rhynhart’s office, whose annual budget is decided by Council, said its agenda for 2019 will focus on bigger impact audits.

“While we’re not currently considering an audit of the Activities Grant Fund at this time, we’re constantly reviewing new information and tips received through our phone line that could change our upcoming plans,” said Controller spokesperson Jolene Nieves-Byzone.

Who got grants in your district?

Check out the full list of grant recipients in your district from 2016 to 2018.

District 1 – Mark Squilla (2016-17 and 2017-18)
District 2 – Kenyatta Johnson (2016-17 and 2017-18)
District 3 – Jannie Blackwell  (2016-17 and 2017-18)
District 4 – Curtis Jones (2016-17 and 2017-18)
District 5 – Darrell Clarke (2016-17 and 2017-18)
District 6 – Bobby Henon (2016-17 and 2017-18)
District 7 – Maria Quiñones-Sánchez (2016-17 and 2017-18)
District 8 – Cindy Bass (2016-17 and 2017-18)
District 9 – Cherelle Parker (2016-17 and 2017-18)
District 10 – Brian O’Neill (2016-17 and 2017-18)

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