Several transparency gaps in the finances of the Baltimore Children & Youth Fund are prompting concerns among taxpayer advocates who say the city government needs to provide stricter oversight of its grantmaking.

The Baltimore Children and Youth Fund (BCYF) was established as a fully taxpayer-funded program with no sunset date, having been enshrined in Baltimore’s charter by city voters via a 2016 amendment. Then-City Council President Jack Young described it as a way to counter “inequalities” that led to the death of Freddie Gray.

BCYF was ultimately set up as an outside nonprofit despite being exclusively funded by city taxpayer dollars. The organization announced in 2022 that it awarded a $150,000 grant to 35 local nonprofits — a total taxpayer cost of $5.25 million. The announcement stated that each organization would be paid in nine installments over three years.

Despite the fund handing out millions in taxpayer dollars, only three of the awardees reported receiving government grants in either or both fiscal years 2022 and 2023. Community Law in Action listed $49,000 in 2022; Sankofa Children’s Museum of African Cultures listed $52,000 in 2022; and Let’s Thrive Baltimore listed $186,000 in 2023 and $32,000 in 2022.

Nonprofits are required by law to disclose how much funding they receive via government grants, but since the BCYF is technically not a government agency, it is unclear whether that requirement applies for its grantees. Neither BCYF nor Mayor Brandon Scott’s office responded to requests for comment about the BCYF’s financial transparency.

BCYF listed 35 awardees on its 2022 announcement webpage. However, only 28 of these groups are listed as grant recipients on the BCYF fiscal year 2022 nonprofit tax form. Each group on the tax form was listed as receiving $150,000 from BCYF.

The seven missing awardees identified by FOX45 News are Beadly Speaking Jewelry, The Bloom Collective, Challenge 2 Change, Dance and Bmore programs, Healthy Lives, The Wildseed Gear Library and Liberty Village Project. None appeared to submit nonprofit tax forms for the relevant fiscal year, and none have received nonprofit certification from the IRS, meaning they likely utilize a process called “fiscal sponsorship” where another nonprofit handles their financials on their behalf. This shields much of their financial information from public disclosure.

Further investigation identified specific fiscal sponsors for some of the groups missing on BCYF’s fiscal year 2022 nonprofit tax form. Fusion Sponsorships lists Challenge 2 Change as a partner. Dance and Bmore programs lists checks payable to the Maryland Philanthropy Network, which received a $150,000 grant on BCYF’s fiscal year 2022 nonprofit tax form. Healthy Lives’ listed address is shared with Succor Transitional Program, which received a $150,000 grant on BCYF’s nonprofit tax forms for fiscal years 2022 and 2023.

The Wildseed Gear Library’s listed address is shared on a nonprofit tax form for fiscal year 2020 from Excellence & Ambition, which received a $150,000 grant from BCYF in 2023. However, Excellence & Ambition lists a different address in its more recent nonprofit tax forms.

Only two of the 35 BCYF awardees responded to media inquiries from FOX45 when asked for clarification on how they listed the grants on their nonprofit tax forms. These groups, The Bloom Collective and ABC Park Seminoles Sports Agency, confirmed they hired fiscal sponsors to produce their tax forms. They did not respond to questions on who sponsors them and how they disclosed their BCYF grants.

David Williams, the president of the non-partisan Taxpayer Protection Alliance, said the BCYF appears to expose a “massive loophole” for government entities to ensure there is minimal accountability on its spending of taxpayer dollars.

“My biggest fear and concern is that a lot of money is going to nonprofits to conduct these services, and it’s going to make the government spending even more hidden,” Williams said. “If you get any sort of taxpayer money, regardless of if you know of how that’s coming into a nonprofit, you need to be audited every year. And when I say audited, I mean with a fine-tooth comb.”

The BCYF’s nonprofit tax form for fiscal year 2022 also reveals grants distributed to several groups not listed on their award announcement. This includes a $2.45 million grant to the Fund for Educational Excellence (FFEE). No other grant to an individual organization surpasses $300,000.

The $2.45 million grant to FFEE was listed for “aligned grantmaking.” An FFEE financial employee confirmed the group is paid to provide financial sponsorships for BCYF grantees. The employee declined to specify who benefits from these financial sponsorships.

FFEE paid a $123,753 consulting fee to Tanay Lynn Harris, according to its fiscal year 2022 tax form. Harris is the director and cofounder of The Bloom Collective, which is one of the BCYF 2022 awardees not listed on the organization’s nonprofit tax form.

The BCYF detailed FFEE’s role in a 2022 finance committee special meeting. Public notes for the meeting stated that BCYF planned to transition the functions of FFEE to its permanent staff, with payments between the two groups expected to decrease in subsequent years.

“FFEE acts as an advisor, controller, and internal controls for BCYF,” the notes state.

BCYF listed a $1.85 million grant delivered to FFEE on its nonprofit tax form for fiscal year 2023. The group received $2 million from BCYF in fiscal year 2021.

The second largest total grant distribution from BCYF in its nonprofit tax forms for fiscal years 2023, 2022 and 2021 went to Fusion Partnerships at $1.89 million. A spokesman for Fusion Partnerships said “some of our partner projects have received funding from BCYF,” but did not respond to questions on what partners these funds benefitted.

Nonprofits with less than $50,000 in gross income are not required to file a standard nonprofit tax form. The IRS listed 10 of the 2022 BCYF awardees under this category. These smaller nonprofits commonly use a fiscal sponsor to conduct their finances.

The 2022 BCYF awardees with less than $50,000 in gross assets include Cultivating and Embracing Change, Endside Out, Grind Hard Enrichment Program, Lil Laughs, Marching Elite Foundation, MTM Foundation, R.I.S.E. Arts Center of Baltimore, Bamboo Project, Urban Youth Initiative Project and ABC Park Seminoles Sports Agency.

BCYF’s nonprofit tax form for fiscal year 2022 reveals its entire income came from government grants at $13 million. The group used $8.8 million to distribute grants to other nonprofits. The remaining roughly $4 million was used for operational expenses.

Scott Hodge, a senior policy advisor at the Tax Foundation, said Baltimore City’s decision to use a separate organization to distribute its BCYF grants has led to inefficiencies.

“The larger issue here is accountability for city and taxpayer funds,” he said. “Baltimore has effectively outsourced the distribution and management of $8 million in grants to community groups without any apparent structure for accounting how those funds are being used. That is troubling.”

A previous investigation by FOX45 News revealed BCYF was audited by the city on only one occasion, which came in 2019. City Auditor Josh Pasch concluded the program had “opportunities for improvement” on its grant distributions.

Baltimore City agencies are required by law to be audited biennially. However, BCYF operates outside the government as a separate nonprofit.

Baltimore City voters passed a charter amendment Tuesday to establish a brand new reparations fund backed by state income from cannabis sales. Williams said the reparations fund is likely to have a similarly secretive structure to BCYF.

“They’re setting up another fund in perpetuity and they’re probably going to create another nonprofit and have these auditing questions again,” he said.

“You can’t just set up an automatic funding mechanism and have it on autopilot,” he continued. “I would love that, if I didn’t have to do any work, if I just had revenue coming in for the rest of my life, but you know that’s not real life.”

Sen. Mary Washington, a Baltimore City Democrat, warned against allowing the new reparations fund from being stood up as an outside nonprofit.

“The Fund should be located in the Office of the Comptroller for fiscal transparency and accountability,” Sen. Washington said before the reparations fund was approved by voters. “It should never become a separate 501(c)(3) like the Baltimore Civic Fund nor managed by an outside operative like the Baltimore Children and Youth Fund.”

Have a news tip? Contact Patrick Hauf on at pjhauf@sbgtv.com.