Youth fund says it recovered nearly $1M public grant

The Baltimore Children and Youth Fund says it recovered nearly all of the $900,000 in taxpayer funds it awarded to an organization that folded roughly six months later.

BCYF is guaranteed millions in taxpayer dollars annually through an amendment in the city charter. The group operates as a nonprofit and uses taxpayer funds for grants to local organizations that work with children.

A nonprofit tax form from BCYF in 2022 listed a $900,000 grant sent to a group called Thrive Arts, Spotlight on Maryland reported on Wednesday. Thrive Arts stopped operations roughly six months after it was awarded the grant and appeared to never file a tax form showing how its money was spent.

Abdul Ali was listed as the head of Thrive Arts in Maryland business documents. Ali declined to answer questions about how his organization handled the BCYF grant prior to Wednesday’s story and instead referred inquiries to BCYF. He then provided a statement Thursday that said Thrive Arts only received a portion of the BCYF grant.

“We received closer to a third of what you quoted,” Ali told. “There was no nearly $1M that came to us. And, since the programming didn’t happen during our contract, that money was returned to BCYF.”“While I can’t speak in any official capacity for BCYF, I can assure you that it was heartbreaking to have to close down Thrive Arts due to differences of values and management between the cofounders,” he continued.

A BCYF spokesman said prior to Wednesday’s story that a public information request was needed to reveal how much of the Thrive Arts grant was returned to BCYF. The request for the records was submitted.

BCYF then sent a statement Thursday that said roughly 4% of the Thrive Arts grant funds were spent before the remaining money was returned.

“Over the course of 7 months, Thrive Arts utilized only 3.75% of the $900,000 grant, amounting to $33,750,” the statement read. “The remaining 96.25% of the grant was successfully returned to BCYF when Thrive Arts independently decided to cease their operations. This successful return ensured that BCYF retained all unspent fund [sic] as fully reconciled.”

Spotlight on Maryland has yet to receive documents in response to its public information request to BCYF on how much of the Thrive Arts grant was spent and how much was returned.

Laurie Styron, who specializes in nonprofit accounting, said BCYF and Thrive Arts need to be more transparent about the documentation of their partnership, especially because taxpayer money was involved.

“Maintaining public trust should be something charities are enthusiastic about, not something they begrudgingly participate in only when you force their hand,” said Styron, CEO and executive director of Charity Watch, a nonprofit watchdog.

Thrive Arts had its tax-exempt status revoked by the IRS last year because the agency said the organization did not file a tax form for three straight years. Without a filed tax form, there is no public record of how Thrive Arts spent its money.

Styron said nonprofits are supposed to file an additional tax form when they dissolve to reveal how they distributed the remaining funds.

“If Thrive Arts had filed its final tax filing with all the required schedules, we would be able to see if money was returned to BCYF and in what amount,” she said.

“The reason there are rules and laws in place requiring charities to publicly disclose their finances is so that the public has a way to verify how public money is being used,” Styron continued. “The charities are putting the public in a position of needing to guess if funds were properly accounted for based on piece-meal information, much of which should have been disclosed in public documents, but weren’t.”

BCYF said Thrive Arts began operations on Aug. 20, 2021, was awarded its BCYF grant on Sept. 1, 2022, and then ceased operations on March 9, 2023.

While BCYF is funded almost exclusively by taxpayer dollars, it is not required to conduct biennial performance audits like government agencies because it operates as a nonprofit.

The 2022 BCYF grantee announcement webpage listed 35 different awardees of “Grassroots Fund” grants at $150,000 each but did not disclose how much money was sent to awardees of the “President’s Fund” grants, which Thrive Arts was listed under.

BCYF described its President’s Fund as an award that “offers flexibility to address pressing issues at the discretion of the President.” Alysia Lee has served as BCYF president since January 2022 and has an annual salary of $172,033, according to the group’s latest tax form.

The 2022 and 2023 BCYF tax forms listed $150,000 payments to dozens of organizations labeled under the Grassroots Fund. However, BCYF claimed on its website that the Grassroots Fund awardees for 2022 and 2023 received the $150,000 in installments over three years.

The BCYF statement Thursday described its President’s Fund award to Thrive Arts as a “multi-year grant.”

The 2022 BCYF tax form showed a $900,000 payment to Thrive Arts under the President’s Fund. There was no mention of Thrive Arts on BCYF’s latest tax form in 2023.

Spotlight on Maryland asked a BCYF spokesman to explain the discrepancy between the organization’s claims of multi-year grant payments and the payment structure detailed in its tax forms. He did not respond.

Styron said nonprofits can file tax forms so that they either reflect money spent in that fiscal year or money pledged that fiscal year. She said her concern with BCYF and Thrive Arts roots in the lack of public tax filings.

“Irrespective of potentially differing accounting methods or fiscal years, the claims by the two charities about how much money was used and returned by Thrive Arts have not been adequately substantiated,” Styron said. “If Thrive Arts received $300,000 of the $900,000 pledge, spent only 3.75% of the grant, and returned the rest, this should have been publicly disclosed in Schedule N of its final tax filing. Since it didn’t bother to file tax returns, the public has no way of verifying what happened to the taxpayer funds.”

Nonprofits list grants to other organizations under Schedule I of their tax form, which includes a question that reads, “Does the organization maintain records to substantiate the amount of the grants or assistance, the grantees’ eligibility for the grants or assistance, and the selection criteria used to award the grants or assistance?” BCYF checked yes in response to the statement on its filed tax forms.

BCYF previously told Spotlight on Maryland that the grant to Thrive Arts “was to support the building of a micro-credentialing program that provides accessible professional learning opportunities to strengthen Baltimore’s hyperlocal ecosystem in successfully and sustainably supporting youth.”

Thrive Arts’ website was taken down, but an internet archive showed it provided fiscal sponsorships and consulting for art-focused organizations.

Fiscal sponsors typically conduct the finances of smaller, newly established nonprofits that have yet to receive a tax-exempt status from the IRS. The smaller nonprofit’s spending information is included under the fiscal sponsor’s tax form, which combines the finances of its clients.

Professor Brian Mittendorf, who specializes in accounting at Ohio State University, expressed concern that Thrive Arts operated as a fiscal sponsor but appeared to never file a tax form.

“The unusual aspect here is that not only did they not meet that bare minimum, but if they’re getting public funds, or just a grant of that size, you would expect the grant provider to provide some additional oversight to ensure those resources are used appropriately,” Mittendorf previously told Spotlight on Maryland. “The fact that they weren’t even in compliance with filing their financial statements indicates some concerns about whether sufficient oversight was provided with those funds.”

Spotlight on Maryland is a joint venture by FOX45 News and The Baltimore Sun. Have a news tip? Contact Patrick Hauf at [e-mail].