San Francisco Considers Disclosure Law for Charities That Receive City Funds

San Francisco charities that receive city funds would be required to open all their meetings to the public and take numerous other steps to disclose information about their finances and operations, under a plan being pushed by a city legislator.

The controversial proposal, which was created in response to a messy fight among AIDS activists and charities, is expected to be considered by the city’s Board of Supervisors within the next four to six weeks.

Legislators elsewhere are eagerly waiting to see whether the proposal succeeds. Many of them say they want to find ways to make charities more responsive to the public.

“It’s a very interesting idea,” says Ronnie M. Eldridge, a New York City Council member. “It’s something that I want us to study. We need some kind of oversight and accountability for charities, beyond what already exists.”

Charities in San Francisco and elsewhere are divided about the new proposal. Some worry about the cost of keeping up with public requests for information and participation in meetings. But others say that the legislation will only reinforce standards of openness and accountability that non-profit groups should be following anyway.

The San Francisco proposal drafted by City Supervisor Tom Ammiano, would require non-profit groups that receive city money to:

* Open all their meetings, including board meetings, to anyone who wants to attend — except for meetings that deal with personnel or litigation. If more people than a charity can accommodate in its offices ask to attend, it can ask a city supervisor for permission to turn people away or it can delay the meeting until a bigger venue is found.

* Make all documents involving charity operations, from check stubs to minutes of meetings, available to the public. That requirement would cover information about donations from private sources, in addition to government financing. Mailing and copying costs for the documents would have to be paid by the person who asked for the information, not by the charity.

* Agree to have a city-appointed observer on the board of directors, if the Board of Supervisors deems it necessary.

Many of the details of the proposal have not been worked out, such as whether it should apply to all groups that receive city funds or only those that receive at least $100,000.

The push to force charities to disclose more information about their activities came after a group of Bay Area AIDS activists complained that they had had trouble getting detailed information about expenditures at the San Francisco AIDS Foundation. The foundation is one of the city’s largest charities providing comprehensive services, from housing to medical aid, for people with HIV or AIDS. It has an annual budget of $18-million.

Leaders of the local chapter of the AIDS group ACT UP and of the Harvey Milk Lesbian, Gay, Bisexual Democratic Club say they sought the information because they had heard numerous complaints from people who said the AIDS Foundation had refused them services. When the AIDS leaders asked the foundation why money from various fund-raising events had not gone to expand services, they say, the foundation refused to explain how the contributions had been used. When they asked to sit in on board meetings, they say, the foundation again refused.

Finally, the activists got a copy of the informational tax return, or Form 990, that the AIDS Foundation filed with the Internal Revenue Service. From it, they learned that four of the foundation’s top executives earned six-figure salaries. Pat Christen, the executive director, made more than $162,000 in 1995.

The salaries infuriated activists. “We can’t get housing subsidies, there’s not enough money for AIDS drugs, yet there’s plenty of money for high salaries in the $100,000 range?” says Michael Petrelis, an ACT UP volunteer who says he was refused services by the foundation. “Non-profit groups like the San Francisco AIDS Foundation,” says Mr. Petrelis, “get millions of public dollars, and we want to scrutinize how the money gets spent.”

Leaders at the San Francisco AIDS Foundation deny that they refused anyone services, although they say that in the past three years they stopped providing aid to about 100 people who stole from the foundation or acted violently toward staff members.

“We’ve had to set up very clear parameters to insure the safety of the people doing work here,” says Derek Gordon, director of communications for the San Francisco AIDS Foundation.

Mr. Gordon says that the “sunshine” proposal is rooted in a vendetta by a small group of angry activists, who “want to control our finances.”

He says his group is concerned that the disclosure proposal would make it hard for charities citywide to do their work.

“We see this proposal as an enormous waste of time and energy that would keep us from providing vital life-saving services,” he says.

Non-profit groups in the city have formed at least three different coalitions to protest the proposal.

Jan Masaoka, executive director for the Support Center for Nonprofit Management in San Francisco and a leader of one coalition, says the proposal unfairly discriminates against charities. “The city has many contracts with for-profit businesses and doesn’t require any of this from them,” she says.

Her group is one of many that receives more than $100,000 annually in city aid and would probably be affected by the law if passed.

She says she is especially worried about how board members would feel if the proposal was passed. “This is intrusive to them,” she says. “It doesn’t treat them as the public citizens they are. Instead it treats them like criminals who have to be spied on. I think people would drop off boards instantly.”

She also says she worries that anti-abortion activists would disrupt Planned Parenthood meetings and angry painters rejected by art shows would act out at museum board meetings. “It would bring the work of non-profits to a grinding halt,” she says.

Not everyone agrees.

Bob Rybicki, executive director of Shanti, another San Francisco charity that provides services to people with AIDS, says charities should be open and responsive to the public.

“There should be open board meetings,” he says. “Constituencies should be present, and there should be time for public comment. It’s important to get feedback.”

But he says he is worried about the time it will take to handle requests for documents.

The legislation’s creator, Mr. Ammiano, says he is aware of the concerns some charities have expressed and will take them into account as he proceeds.

“We don’t want to see non-profit groups go under,” he says. But, he adds, borrowing an observation made by Supreme Court Justice Louis D. Brandeis, “sunshine is a good disinfectant.”