Collective Impact, once a leading nonprofit in San Francisco, is on the verge of financial collapse due to a scandal involving a former city official.
Established in 2007 as an after-school program, Collective Impact has grown to manage an annual budget of $8 million, catering to the Western Addition, a historically Black neighborhood.
However, the organization now finds itself in a precarious situation where it may shut down within two months, leaving hundreds without essential services, including workforce development and literacy programs.
At an administrative hearing that began this week, Collective Impact’s attorneys highlighted the severe funding shortfall, stating that without public funding, the nonprofit’s programs could cease entirely by October 2025.
The journey to regain the city’s trust and restore public funding has been a daunting one.
City officials disclosed concerning new findings this week, indicating that the nonprofit has not complied with requests to provide critical financial information as part of the ongoing investigation into alleged misconduct.
Specifically, investigators claimed that Collective Impact misused public funds for employee bonuses—a direct violation of grant stipulations.
The troubles for Collective Impact escalated in September 2024, when The Standard published allegations that Sheryl Davis, the former Human Rights Commission Executive Director, had directed lucrative city contracts to the organization while living with its Executive Director, James Spingola, without disclosing their relationship.
Davis’s resignation followed soon after the scandal broke, casting doubt on the integrity of the Dream Keeper Initiative—a key program championed by former Mayor London Breed aimed at supporting the city’s Black community.
Among the funds allocated via the Human Rights Commission, some earmarked for Collective Impact were allegedly misused on extravagant dinners and luxury travel instead of their intended purpose of mentoring youths in the juvenile system.
In March, the city attorney released a comprehensive investigation detailing inappropriate financial relationships involving Davis, alleging that she used nonprofit funds for personal gains, including her son’s university tuition and luxury travel.
The investigation also uncovered that Collective Impact reimbursed Davis for various expenses, further muddying the organization’s financial waters.
Recent disclosures from the city revealed that Davis’s involvement with Collective Impact was deeper than initially thought.
While employed as a city official, she signed official documents for the nonprofit and remains a signatory on its bank account, with a corporate credit card still in her name.
City auditor Amanda Sobrepena testified during the hearing that Collective Impact had been uncooperative in providing documentation concerning charges made to Davis’s credit card between February 2020 and February 2022.
Despite Collective Impact’s claims of not having accessed records before March 2022, the refusal to disclose the card’s charges raised further eyebrows among city officials.
Moreover, auditors uncovered unauthorized stipends of $500 and $1,000 paid to employees, which Spingola referred to as “appreciation payments.”
City investigators argued these payments constituted a misuse of grant funds intended solely for direct client services.
Deputy City Attorney Aaron Wiener emphasized the necessity to safeguard public resources from misappropriation, underscoring the serious nature of the allegations against Collective Impact.
In response, the nonprofit’s legal team rejected the city attorney’s findings, labeling the allegations as mere speculation and asserting that the charges lack substantial evidence.
Lauren Kramer Sujeeth, representing Collective Impact, argued that the city’s claims were “factually flawed” and suggested the financial discrepancies, while unfortunate, should not be construed as corrupt actions.
During the hearing, Spingola asserted that his relationship with Davis was not romantic, refuting suggestions that their entangled finances were inappropriate.
Sueth insisted that “Errors are not corruption” and maintained that the mishandled funds represent a minuscule fraction of the resources Collective Impact allocates towards benefiting its clients.
As the hearing unfolded, the attorneys for Collective Impact stressed the critical need for city funding, especially in light of the $2 million in private financing the organization has procured since losing city grants.
This funding has been essential to maintain services, including a summer program for 125 students, highlighting the organization’s ongoing efforts to support the community despite financial setbacks.
The atmosphere at the hearing grew tense as the legal teams engaged in prolonged debates over the presented evidence, leaving uncertainty regarding when the ruling on Collective Impact’s eligibility for public funding would be announced.
The city is pushing for a decision that would bar the organization from receiving public financing until 2030, signifying the severity of the accusations against it.
The fallout from the Collective Impact scandal has reverberated across San Francisco’s nonprofit landscape, especially among organizations servicing Black communities.
Mayor Daniel Lurie has taken steps to restructure the Human Rights Commission, merging it with another troubled agency in hopes of enhancing coordination amidst a significant budget deficit of $782 million, which has prompted substantial funding cuts.
In light of recent events, there are fears that the allegations against certain nonprofits may have lasting consequences for the wider community.
Rev. Amos Brown voiced concerns over the impact of punitive measures following the scandals, asserting that while justice is warranted for those responsible, the broader Black community should not be adversely affected.
Collective Impact is not alone under scrutiny; other organizations have also faced sharp investigation.
Urban Ed Academy, associated with the Human Rights Commission, is currently under investigation as well due to allegations of contract favoritism and mismanagement of city funds.
As witnesses continue to testify in the administrative hearing, the next weeks will be crucial for Collective Impact and its future in San Francisco.
image source from：sfstandard
