Council's Secret "WAM" Fund

By Ryan Briggs

Few taxpayers know about it, but each year their district Council members divvy up a $1.98 million slush fund buried deep within the Department of Parks and Recreation's $47.8 million budget.

Referred to by one political aide as "Council's Walking Around Money," the Philadelphia Activities Fund, Inc. (or simply, "the Fund") is a grants program that essentially operates like a piggy bank for the city's political class, an easy pot of money for Council members to hand out cash to favored groups in their districts.

The Activities Fund is charged with the ambiguously worded goal of "assisting non-profit organizations in the City of Philadelphia to serve diverse segments of the Philadelphia community." Minimal guidelines and hardly any oversight have led to taxpayers' dollars being spent on everything from neighborhood block parties and barbecues to drug rehab centers and town-watch programs.

According to Fund records, the grant program is used to finance numerous non-profit organizations that violate the city's Fair Practice law, such as Catholic schools, various houses of worship and Boy Scout troops. However, the Fund has even flaunted its own guidelines by forking over money directly to businesses, including several private daycare programs and the for-profit newspaper Impacto.

A number of politically connected non-profit organizations that are undergoing audits or investigations for alleged misspending were routinely awarded money, including the Ogontz Avenue Revitalization Corporation, the Urban Affairs Coalition and the NuJuice Foundation, whose president, Eric Ward, was jailed in 1990 for embezzlement.

With over 1,078 grants awarded during the last fiscal year alone, it might be easier to list the groups that didn't benefit from the Activities Fund. It's easier still to wonder why your summer cookout or neighborhood daycare center wasn't special enough to get some of the largesse. One answer, not surprisingly, is politics.

In Philadelphia, it's never about what you know, but who you know. As a result, the list of grantees has quirks tailored to the tastes of specific Council people.  Are you a Boy Scout troop located in Councilman Brian O'Neill's district?  Then you can get a grant.  But few other troops around the city do.  Some Council people are happy to help pay for block parties, others are not.  Some recreation centers get them, but not all.  Some Mummers groups get them, but not others.  For every youth baseball league that gets a grant, there is one that does not.  And so it goes.

Minimal Oversight

Despite its nominal association with Parks & Recreation, the Activities Fund is actually a separate, tax-exempt corporation with a budget that is entirely created with dollars shifted out of the Recreation Department's general fund, but solely controlled by City Council.

"It wasn't established by us, but the Mayor's Office and City Council. Somehow the administrative function was then placed within our department. So, we were asked to administrate, but not funded to do anything beyond that," said Michael DiBerardinis, currently Deputy Mayor in charge of Parks & Recreation. DiBerardinis was Recreation Commissioner when the Rendell administration established the Fund in 1995. 

While DiBerardinis said that he believed the majority of the money was 

spent on worthy causes, he said that any real oversight on spending was difficult. The deputy mayor claimed the nature of the grants, which range from $500 to a maximum of  $6,500 each, along with intentionally loose requirements laid out in the program's enacting legislation, make it impossible for his department to police the program.

"I'd say we do a good job within the definitions of the program and the narrow limits of what's required of us, but we have no audit capacity," he said, noting that grant guidelines do not require 501(c)3 non-profit status, just contact information and names of board members. "There are thousands of grants every year. Think of the small army it would take to manage that program."

DiBerardinis said Parks & Recreation provides a part-time staffer to process and "oversee" grant requests, but that the employee typically checks only to make sure applications are fully completed. Nearly all funding requests are passed along directly from Council members, and nearly all get approved.

 "We don't make any decisions about where this money goes, so essentially we're a second-tier administrative unit for the program.... The decision-making is all done across the street," he said, referring to City Hall, where Council's offices are located.

Meaning: If you want to get in on the action, it sure helps to be buddies with a Council person.

And City Council likes it that way.

Zack Stalberg, director of the political watchdog organization the Committee of Seventy, says programs operated solely by Council people are, more often than not, tools for elected officials to exert influence.

"Council people love to do constituent service, and they especially love to dole out money, because it not only benefits their district but it helps them get reelected," he said.

If you're not familiar with the concept of "constituent services," well, you may not be from Philadelphia, or any other city dominated by a political machine. The local branch of the Democratic Party has maintained its stranglehold on city politics through a network of pols, ward leaders and committee people who garner political support by acting as gatekeepers to what are, essentially, basic city services.

This machine ran a lot more smoothly in decades past, when bountiful patronage jobs and unchecked spending could easily reward party boosters. But FBI investigations, 311, the advancement of civil service, reform voters and an ever-shrinking municipal budget have eaten into the organization's powerbase and the relevance of  the"constituent services" concept.

The Activities Fund is a vestige of the old, transactional Philadelphia, and perhaps one of the last.  Stalberg said he couldn't think of another pot of money operated by the city with similarly lax controls.

The Police Substation

So, it should come as no surprise that ward leaders and committee people are at least 22 times more likely to be awarded Fund grants than the average citizen. And, more importantly, they are much likely to continue receiving grants regardless of what the money is used for.

Consider this example from the West Philadelphia's Squirrel Hill neighborhood: Cynthia Preston has long been a committee person in the 46^th Ward, although her ailing health and occasional reliance on an oxygen tank for respiration have recently strained her involvement in politics.  Yet, Preston still becomes animated as she recalls helping found the Squirrel Hill Police Substation in 1995 to combat violent crime in her neighborhood.

Preston and neighbors secured donated office space in an apartment building near 47^th and Chester, paying for office expenses with annual grants from the Activities Fund, courtesy of district Councilwoman Jannie Blackwell.  Despite its name, the "Police Substation" actually used a rotating staff of town-watch volunteers to fax crime reports to the Philadelphia Police.

"Say, you've got problems on your block.  You call 911 and file a report.  Then you would call the substation and the town-watch people that work out of the substation. They would be like the police, setting up and observing. They try to catch the [criminals] if the police didn't catch them, and make sure someone follows through," says Preston.

The substation concept seemed like a good idea at the time, garnering press and, Preston says, several awards.  But, nearly two decades later, with cell phones ubiquitous and cops on Twitter, and Preston's own health and organizational drive failing, the substation had been largely forgotten.

Preston insists she is still in frequent contact with the police and that the substation has only been temporarily closed while "the owners are remodeling."  However, neighborhood business owner and Cedar Park Neighbors Association board member Sean Dorn said the substation hasn't been operational for years. A site visit found the substation's office was not under renovation, merely vacant with a sign indicating that a notary public was supposed to have moved into the space in November.  Officer Charlie Marsden, from the nearby University City District Police Station, said he hadn't spoken to Preston in "maybe two years."

Nevertheless, the Squirrel Hill Police Substation still gets grants from the Philadelphia Activities Fund, totaling $7,000 over the past three years. 

Preston said she "never thought of [the Activities Fund] as government money."  While she claimed that a portion of the money still goes toward office supplies for the seemingly inoperative substation, Preston says she now mostly uses the grants to support a popular children's Halloween party, attended last year by Councilwoman Blackwell.

The tale of the Squirrel Hill Police Substation is an example of the problems with the Activities Fund. It is a stew of who-you-know politics, with a generous helping of political favoritism, mixed with absent oversight and near-zero accountability. We end up with tax dollars supporting a police substation that is not run by police, that has been inactive for years and serves no real purpose.  Yet, the money still flows -- for Halloween parties.

While individual grants tend to be small, taken collectively, the program gives each of the 10 district Council members an extra $200,000 to spread across their territory, on average.  That represents a 26 percent bonus on top of the average Council office's approved cut of the city budget, estimated at $1.3 million per legislator.

Many Benefit

If this were a city-run program, Council would complain about the potential for abuse and the lack of controls.  But when it comes to their Activities Fund, they defend its virtues and minimize its shortcomings.

Maria Quiñones-Sanchez, whose 7^th District collected more Fund dollars than any other in 2011, sees the Fund's inefficiencies as inseparable from its benefits.

 "If the city put too many requirements on this, it could become overly

 burdensome.  Many of these groups are volunteer-run and have no official staff.  You can only ask so many things from these groups," she said.  "I think this is the best utilization of money we have.  We're district-council folks, we represent 157,000 people and this is $200,000 that allows us to support some really good things without all those restrictions.  It's not a lot of money."

 Sanchez acknowledged that abuse was a problem.

 "I'm not going to sit here and say that, in a pool of 10 district Council members, some might not be abusing that privilege," she said. 

 "In my district, there used to be about 36 individual people getting all the money.  Now we distribute to over 160 groups," said Sanchez, alluding to uneven distribution under her predecessor, Rick Mariano, which she corrected. 

 However, Sanchez also said that she believes control also allows Council people to wisely shape how the program is run.

 "We have some additional policies in our office to shape what we wanted to do with the money.  We ask folks to prioritize activities targeted at youths and seniors, and we like activities in our rec centers," she said, adding that she also added extra checks to prevent misspending. 

 "Every year when you submit your new application, we ask for receipts for expenditures.  That's not a requirement currently, but we do it in this office," said Sanchez.

 Interestingly, for each of the last three years, Sanchez approved grants to the privately operated newspaper Impacto.  The purpose of these grants, said newspaper owner Napoleon Garcia, was to pay for the annual Delaware Valley's Most Influential Latinos gala event.

 Garcia said he used the grants to assist the Multicultural Affairs Conference (MAC), the primary organizer of the award ceremony.  Garcia said he had been encouraged to apply for the grant by MAC, but "didn't really know where the money comes from" or have any knowledge of the grant program's restrictions on funding private businesses.

 Sanchez is a board member of the MAC -- and also a recipient of the Most Influential Latinos award for three years running.

While the Activities Fund may indeed provide funding to some legitimate grassroots organizations, it does so at the direct expense of other city services.

The Fund has proven to be astonishingly resilient amidst the city's unending financial crises and the Rec Department's particularly chronic under-funding. In 2011, Council easily approved a $550,000 increase in contributions to the Activities Fund, while simultaneously cutting funding from the department's other operations for nearly the same amount.

The increase in the Activities Fund came as the Philadelphia Parks Alliance, a citizen advocacy group, launched a campaign to restore a small amount of Parks and Rec's otherwise mangled budget to deal with crumbling infrastructure.  Last November, Council begrudgingly approved a $2.6 million increase, a little more than the cost of the entire Activities Fund, after a year of lobbying, protests and begging by the Alliance.

Recreation Department facilities do gain some benefit from the Fund through spillover from other awardees and from a series of grants targeting Recreation Advisory Councils, groups that coordinate activities at rec centers and parks.  These councils are managed by community members and represent less than 10 percent of all Fund grants, says DiBerardinis. 

Eight months ago, when the City Controller was apprised of the existence of -- and possible abuses in -- the program, the office said it would investigate the Activities Fund.  It did not.

Instead, the Controller decided to investigate only the Recreation Advisory Councils, which get a relatively small sliver of Fund money.

Controller Alan Butkovitz, a mayoral hopeful, party loyalist and leader of the 54^th Ward, has taken a pass at examining the thousands of other Fund grants steered with no thought beyond the whim of a politician.

Click here for a listing of the Philadelphia Activities Fund grants made between 2008 and 2011

 

Cover Photo: Students lobby Council for more parks and recreation funding.