GOLDEN HAMMER: Youth charity slammed for poor taxpayer protections over millions in federal aid
Big Brothers Big Sisters of America is a well-known charity that helps troubled youth find mentors. The program might need a few extra mentors, though, for its accounting department.
An internal Justice Department audit slams the charity’s fiscal management, demanding $4 million in taxpayer money be refunded before it is spent and questioning whether $19 million already spent actually helped intended youths.
Investigators found that the philanthropic organization didn’t keep records on how it spent money, couldn’t explain the reasoning for some purchases and charged the government based on estimates instead of actual amounts. For instance, the organization handed out cash without “any timesheets, invoices, or ledgers to support the payments,” investigators said.
And many expenses were charged to the government based on employees’ memory and assumptions, investigators said. The organization’s finance director, for example, said he paid consultants with government funds based on the company’s name and whether or not he remembered that company being tied to the Justice Department programs. Consultants rarely had to provide proof of their work or explanation for their expenses, investigators said.
“BBBSA’s practices for recording and supporting grant-related expenditures were inadequate to safeguard grant funds,” the Justice Department inspector general reported.
“Taxpayers would be astonished by the amount of mismanagement, failed oversight and waste in grant programs across the federal government that is annually documented by a small number of audits and investigations,” Grassley said. “It raises serious questions about how the vast remainder of taxpayer funds are spent by grantees and monitored by the government. There needs to be legitimate, rigorous evaluation of these programs to ensure that inefficient grantees or less than scrupulous grantees are prohibited from getting funds.”
For failing to safeguard money designed to help troubled youths, Big Brothers Big Sisters of America wins the Golden Hammer, a weekly distinction awarded by the Washington Guardian to highlight examples of waste and abuse with taxpayer money.
Big Brothers Big Sisters acknowledged the problems, but said it shouldn’t overshadow the help it has provided nearly 17,000 at-risk youth.
“BBBSA understands that programmatic achievements do not absolve our organization of its responsibility to comply with all grant guidelines; we acknowledge deficiencies in our compliance with, and financial management of, the grants reviewed in the audit period,” said a letter from the organization. “We take full responsibility for those deficiencies and have made substantive changes to our financial systems and grants administration to address these inadequacies.”
Roughly 85 percent of the funds questioned by the audit were sent to affiliate programs in local communities where BBBSA had almost no oversight as to how the money was spent, putting funds “at risk for fraud, waste, and abuse,” the IG said.
“Although these affiliates carry the Big Brothers Big Sisters name, they are separate and distinct non-profit organizations that are operated independently from BBBSA,” investigators said. “BBBSA could not provide assurance that the grant funds that were passed through to affiliates were adequately tracked and safeguarded.”
Examples of problems abound. For example, one $1,600 travel expense was charged to multiple grants. And the government was charged $10,000 more than BBBSA actually spent on travel, which the financial director admitted was a mistake.
Plus, no records were kept as to the specifics of the travel. Restaurant reimbursements had just the cost of the meal with no record of how many people ate or what the meal was for. And in one instance, investigators found that DOJ funds had paid for a board member’s flight to D.C.
The IG also found that employees’ salary and benefits were charged based on Justice Department-approved budgets, not by the amount of work actually done. The IG also said BBBSA didn’t keep government funds separate, instead mingling them with money raised from other sources, calling into question if the cash was spent on federal objectives.
“BBBSA did not have an internal control system in place to safeguard funds and ensure that grant funds were used solely for authorized purposes,” the IG said.
Between 2009 and 2011, the Justice Department gave the organization $23 million for various programs to help stop juvenile delinquency and cut down on crimes commited by young people.
BBBSA describes its mission as providing “children facing adversity with strong and enduring professionally supported one-to-one relationships that change their lives for the better.” According to the organization’s website, it operates in almost 370 communities in all 50 states.
The IG wants BBBSA to fully document the $19 million it has already spent, plus a refund of $1 million for expenses it found to be wrong so far. And it recommended the DOJ take back the nearly $4 million that has yet to be spent by the organization.
Then, the IG said, a complete overhaul of BBBSA’s financial management is needed, including establishing “appropriate internal controls…to assure that its financial management system provides for adequate recording and safeguarding.”
Investigators noted that BBBSA has undergone some management changes, including the appointment of a new CEO last year, but said they cannot be certain what effect the new leadership might have on its fiscal bookkeeping.