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
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.
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
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
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
"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
The substation concept seemed
like a good idea at the time, garnering press and,
Nevertheless, the Squirrel Hill Police Substation still gets grants from the Philadelphia Activities Fund, totaling $7,000 over the past three years.
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.
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 7th 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
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
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 54th Ward, has taken a pass at examining the thousands of other Fund grants steered with no thought beyond the whim of a politician.
Cover Photo: Students lobby Council for more parks and recreation funding.