Amid city audit, Southwest Neighborhoods Inc. braces for broke
The fate of Southwest Neighborhoods Inc. rests on a city-commissioned financial audit that has yet to be completed.
SWNI board members say while they wait for the city to conduct a forensic audit of the coalition's finances, they're running out of money to sustain operations.
After the Portland City Council opted to delay nearly $300,000 in funding to the Southwest Portland district coalition in July, the coalition has lost all stable funding streams. City commissioners voted to delay approval of a regular contract with SWNI, citing concerns over the group's pushback on a records request from the city. The council said it wanted an audit before reinstating SWNI's contract, after murmurs of past financial malfeasance at the coalition. SWNI officials say their records are sound, as are their routine IRS reviews.
It's unclear when the city's audit will be wrapped up. SWNI has limited staffing and volunteers who are scrambling to provide copies of thousands of documents spanning nearly a decade to the city's Office of Community and Civic Life for auditors to review. As the clock ticks, SWNI, which oversees 17 neighborhood associations in Portland, could run out of money by December.
"I think we need to raise about $15,000 by December, but at the very least we need to raise $7,000 by December," Leslie Hammond, president of SWNI's board of directors, told the board Wednesday, Sept. 24, pleading for donations to the nonprofit coalition.
In August, SWNI's board voted to proceed with employee furloughs and subsequent pay reductions. The nonprofit organization also has opted to stop paying rent at the Multnomah Arts Center, the city-owned building it leases for office space, requesting a deferral. The center has been closed to the public since spring due to COVID-19.
Coalitions like SWNI serve as the liaison between the city and neighborhood associations. They exist primarily to serve Portlanders in a public capacity, but disputes have arisen about whether groups like SWNI should be treated like public agencies.
SWNI's contract with Civic Life made up more than 80% of the coalition's annual revenue. Other funds came in the form of grants from city bureaus like the Bureau of Environmental Services and the West Multnomah Soil and Water Conservation District. Since the council's request for an audit in July, BES has shifted its grant funding to a different district coalition, Neighbors West Northwest. As a result, two of SWNI's employees whose salaries were paid with grant money, have left. BES's decision to shift grant funds was done in consultation with SWNI, said Sylvia Bogert, SWNI's executive director.
"We wanted to make sure the scope of work ... continues without interruption. It was felt this was the best way to do that," Bogert said.
With city funds in limbo, grant money gone, and a PPP loan nearly exhausted, financial projections show SWNI will use up its reserves by the end of November, even without rent payments factored in.
"The sooner we can get the audit done, the better for the organization's survival," Teddy Okonokhua, SWNI's treasurer, told the board in August.
City officials, including Mayor Ted Wheeler, say SWNI is complying with the request from Civic Life for nearly 10 years' worth of financial documents, and the city has secured a firm to complete the forensic audit. "It looks like everybody's trying to get to a resolution on this," Wheeler told the Multnomah Neighborhood Association in September.
A forensic audit was initiated after employees in the Civic Life office, which oversees district coalitions like SWNI, sounded alarms to Commissioner Chloe Eudaly, who oversees the neighborhood association office. Staff said after learning that SWNI's own board members were denied some of the organization's past financial records, the city requested those same records for review.
Some of SWNI's members allege the city's actions are politically motivated, and are being fueled in part by Eudaly, who has criticized the role and practices of neighborhood coalitions in the past.
In response to the city's records request and audit, SWNI hired an attorney to assist them. Bogert explained that many of the records requested are confidential and contain sensitive information related to past employees, legal matters and other matters that shouldn't be disclosed publicly. SWNI fears public disclosure potentially could open up the coalition to legal liability. Suk Rhee, director of the Civic Life office, said while most of the SWNI records would become public, the city offered to review the records of concern with SWNI. Instead, the group hired legal counsel.
"In our letter to SWNI on June 8, the City already offered SWNI a process for identifying which materials they consider sensitive so that we can review those requests together prior to submitting them," Rhee stated via email. "SWNI has engaged an attorney and so we will be working with their attorney to address their concerns."
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