Metro Councilmembers Rip Ryman and Ronnie Steine are moving to repeal an ordinance the Council passed last summer requiring nonprofit organizations receiving Metro donations to either make quarterly reports to the Council of their grant expenditures or open their board meetings to the public when considering the expenditure of the public monies.
The two councilmen say the legislation — which former Councilman John Summers sponsored after a City Paper reporter was forced to leave a Nashville Area Chamber of Commerce board meeting in April — is redundant and a waste of resources.
Several councilmembers last year expressed concern about Metro’s nearly $1.5 million in donations to nonprofit organizations — outside of the several million dollars in donations specifically earmarked in the Metro budget — drawing from an extra $1.96 million money pot the Council created for itself for the 2006-2007 fiscal year.
According to the Metro Council office, the legislative body gave $1,489,735 to non-profits from the initiative fund last fiscal year above roughly $2,599,400 in operating dollars earmarked separately for nonprofits in the city’s operating budget. As reported first by the The City Paper earlier this year, at least three of the nonprofits were not properly registered under Tennessee’s charitable solicitations law when their donations were approved so were not technically allowed to accept donations.
The Council “initiative” fund, as it was called, was not renewed for the current fiscal year. Steine said he does not support creating another in the future.
Steine, who sits on the board of three nonprofit organizations and was once CEO of the nonprofit Oasis Center, said he tracked Summers’ legislation as it made its way through the Council last summer and thought it was a bad bill then. Ryman and Steine said no nonprofit has lobbied either of them to repeal the bill since last month’s elections.
Steine said when he learned Ryman had already drafted an ordinance of the kind he was considering, he signed onto it.
“I think it’s just redundant — Metro checks all these nonprofits out anyway. So I think putting work on them is just not necessary,” Ryman said.
Steine said nonprofits that accept Metro funding are already required to file annual expenditure reports at the end of each fiscal year with the Metro Finance Department, which audits them. He said he does not believe groups typically spend their city donations in the first few quarters of the year anyway, leaving little to report in the first place. And, Steine said, if a nonprofit were not scrupulous, it would not necessarily file an honest report anyway.
He emphasized that the reports to the Council required by Summers’ ordinance — unlike the year-end reports submitted to the Metro Finance Department — are not under the scrutiny of an auditor.
Steine also stressed that nonprofits receiving grants through the Metro Arts Commission must submit grant applications before receiving funds.
Ryman and Steine are sponsoring another ordinance, also scheduled tomorrow for the first of three required readings in the Council, that would only exempt Arts Commission grantees from Summers’ ordinance. Steine said he would press this only if the umbrella ordinance does fail.
Fred Adom, director of the Finance Department’s Office of Financial Accountability, said he agrees with Ryman and Steine that the new reporting is redundant although he said he believes requiring nonprofits to open their meetings to the public when considering the expenditure of public dollars would be a good thing. He said his office reviews nonprofit board meeting minutes when auditing their expenditures.
“You look at the discussion that is going on and look for actual transactions that relate to that. All you look for are transactions that do not have any discussions — or if things are happening and they’re not being discussed, that also tells you that something’s wrong.”
Adom said he does not believe many councilmembers take advantage of his office’s reports. He also said that three of the 12 nonprofits that received Council initiative dollars that his office has audited so far had no plans for spending the money when the Council made the donations.
Steine said he believes nonprofit use of Metro monies needs to face additional scrutiny but not along the lines proposed by Summers.
Summers said he does not believe the new financial reporting requirements pose a burden.
“I think that providing information to the public on how their tax dollars are being spent is always a good thing,” Summers said. “I think the public wants more accountability rather than less accountability, and, as Councilman Steine has said, some reports go to the Finance Department, and other reports go to the Arts Commission, but nothing is coming to the body that approves those grants — and that’s the Council.
“My ordinance last year was a compromise that was reached with the representative for the Center for Nonprofit Management to try to provide more accountability but to not make it any real burden.”