Non-Profit Profiteering
Homeless shelter executives make as much as $1M/year while providing few services
At a series of contentious community meetings, Mr. Brown spoke passionately about the importance of opening the Crown Heights shelter.
“At the end of the day, everyone deserves a place to live,” he said.
Mr. Brown had another reason to push for this particular location: He was an owner of a company that would rent the building to CORE, according to city records. It was one of two rental companies tied to Mr. Brown that have worked with his nonprofit, records show.
The nonprofit said it paid rent to Mr. Brown’s companies because he had contributed his own money to the development of buildings used as shelters, and the city had approved the deals.
Since the Crown Heights shelter opened in 2017, more than $3 million in rent has gone to Mr. Brown’s company.
If the Times had centered their coverage around only the first two lines above, they could have presented an idealized image of the altruistic, mission-focused non-profit. Instead, Amy Julia Harris lays bare the sad realities behind the lofty rhetoric:
Based on hundreds of pages of legal filings, business records and tax documents, as well as interviews with homeless people, city officials and shelter employees, [our investigation] found that under the cloak of charity, executives at nonprofits have collected large salaries, spent their budgets on companies that they or their families controlled and installed relatives in high-paying jobs.
One landlord started a nonprofit that handed out millions of dollars to real estate and maintenance companies that he and his family owned. A Bronx shelter operator was charged earlier this year with laundering kickbacks through a consulting company run by his family. A former board member of another homelessness organization is under criminal investigation after the city said the group paid millions of dollars to a web of for-profit entities he secretly oversaw.
On the whole, the piece draws into question the standard narrative that non-profit organizations are simply underfunded and require ever greater commitment to solve pressing social problems. While private firms are far from perfect, non-profit status doesn’t necessarily imply higher ethical status, and moving an increasingly large share of spending into the public sector has its own pitfalls to reckon with.
What will become of Mr. Brown’s operation in light of these revelations? Time will tell…
Last month, as The Times was finishing this story, the city ordered CORE to close the companies altogether, citing the group’s repeated failures to follow rules. In its statement, CORE denied engaging in any double billing.
Still, the group has been expanding. It has won a $60 million contract to run a federal halfway house in Washington, D.C., and recently was on track to take over the operation of a public golf course in the Bronx through a contract with the city. This week, CORE pulled out of the golf course deal after it was reported in the local news outlet The City.
And despite years of concerns, Mr. Brown’s nonprofit has received $104 million in city funding for homelessness this year. It is one of the largest payments to CORE yet.
Pointer from John Cochrane.