San Francisco’s Urban Alchemy, a nonprofit organization dedicated to embedding formerly incarcerated street ambassadors in underserved neighborhoods, has been flagged for significant financial issues by the city controller’s office, according to a document reviewed by The Standard.
The controller’s office noted in an August 21 letter that Urban Alchemy has struggled to accurately track employee output for the past two years. Additionally, concerns were raised regarding cash-flow problems experienced by the organization at one point.
The findings revealed inadequacies in the records maintained by Urban Alchemy concerning how workers allocate their time across various city-sponsored programs, including those aimed at addressing homelessness and bolstering economic development.
In a statement, the controller’s office emphasized that the identified issues amount to “serious fiscal or programmatic” concerns but are not irreparable. A spokesperson remarked, “This designation is not permanent — it’s meant to motivate corrections and can be rescinded if Urban Alchemy remedies the issues in the next few months.”
These financial troubles come at a critical time for San Francisco’s nonprofit sector, which has a history of receiving substantial funding from the city, amounting to $1.5 billion last year and facing heightened scrutiny amid various scandals affecting prominent organizations.
Jess Montejano, a spokesperson for Urban Alchemy, expressed pride in the organization’s work with the city and commitment to addressing the financial discrepancies.
“We are grateful for our partnership and expanding work with the City to drive real change and results in the neighborhoods and with the vulnerable populations that we serve,” Montejano stated, referring to a Stanford study released the previous year that suggested Urban Alchemy helped to reduce crime in areas where its ambassadors are active.
He insisted that the organization’s finances have “always been strong,” describing their audited financial statements as “100% clean with no issues.” He acknowledged, however, that cash flow is supplemented by a bank line of credit due to regular delays in reimbursement from the city.
Many of the financial findings stem from records spanning 2023 to 2024, which the city controller’s office noted as potentially indicating Urban Alchemy’s financial health yet did not reflect its current situation.
Founded in 2018, Urban Alchemy has gained recognition for bringing stability to challenging areas of San Francisco, including the Tenderloin and Mid-Market, where groups of homeless individuals and drug users often gather. The organization employs around 1,300 workers known as “practitioners,” who don green-and-black vests bearing the Urban Alchemy logo and are tasked with providing support and ensuring clear sidewalks.
The nonprofit expanded its reach beyond California, establishing operations in Oregon, Texas, and Alabama. Between 2020 and 2023, Urban Alchemy’s financial records showed that its revenue and expenses rose dramatically from approximately $10 million to about $70 million.
However, late last year, financial troubles began to surface, with reports revealing that the organization had exceeded its budget by as much as $500,000 in one month.
In a subsequent statement, Montejano disputed claims regarding budgetary problems, asserting that the organization had been directed to broaden its services by the city during that period.
“Urban Alchemy has never ‘blown through our budget,'” Montejano commented, explaining, “Our staffing numbers are dictated by the City and its needs.”
Internal communications among city employees managing Urban Alchemy’s contracts indicated that additional funds were necessary for the organization to meet its payroll obligations. Notably, in November, Supervisor Connie Chan withheld $7.7 million from Urban Alchemy, contingent upon the nonprofit demonstrating positive performance outcomes.
In November, Sharon Hang, Urban Alchemy’s general counsel, warned in a letter to the mayor’s office about potential layoffs affecting over 300 employees due to financial concerns, although the organization has thus far managed to avert mass layoffs.
In May, The Standard reported that city officials had initiated review measures concerning the nonprofit’s management, instigated by the ongoing budget challenges. Urban Alchemy has also requested financial advances from the city to maintain operations.
The nonprofit now faces a critical period as it works to resolve its financial dilemmas while continuing its mission to serve the community.
image source from：sfstandard
