Often with the Government dictating how those services are delivered, which stifles innovation and creates an environment where abuses and perverse financial incentives thrive.
The Phoenix House of New York City misused 223,000 dollars in taxpayer funds including a 91,000 dollar bonus to it's highest paid administrative staff, while six staff members received a combined total salary of 1,086,000 dollars as reported by the New York State Controller's office.
One staff member used 4,000 in state funds to purchase Walmart gift cards which she used to buy alcohol and cigarettes, while other money was used to purchase cars, or to bring out going staff back into the agency.
In Washington D.C. the office of the Attorney General Filed suit against Miracle Hands who diverted more than 300,000 in grant money that was intended to renovate a building to be used as a job training facility for persons with HIV/AIDS to the renovation of Straduim Club a nightclub that boasts five star meals and nude dancers.
In Connecticut there are seven different agencies regulating seven different regions in the state where nonprofits operate creating a bureaucratic nightmare for nonprofit service providers in the state especially for those who operate in multiple regions.
"The contracting process is difficult at best, it is inconsistent across agencies, time consuming and inherently unfair to nonprofit service providers. This has led to mistrust between the nonprofit community and the state and a nonprofit community resistant to systemic change," said a recent report by the Connecticut Institute for the 21 st Century.
It is because of these issues that 11 percent of the public think that nonprofits are spending their money wisely and only 19 percent feel that they do a good job of running their programs effectively according to a Brookings Institute study.
Is the system too broken to be fixed? "No it isn't, but it does need an overhaul that's for sure," said Hall.
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