A.G. Schneiderman Announces Agreement With West Harlem Local Development Corporation To Strengthen Governance And Transparency And Enable Grant-Making To Resume

NEW YORK– Attorney General Eric T. Schneiderman today announced the conclusion of his office’s investigation and its agreement with West Harlem Local Development Corporation (WHLDC), a New York City not-for-profit organization, whose mission is to promote the economic development of the West Harlem community. The agreement requires the organization to implement grant-making best practices and important governance reforms, so that benefits can begin to be delivered responsibly to the residents of West Harlem.

Under a 2009 West Harlem Community Benefits Agreement (CBA), WHLDC is charged with disbursing $76 million in benefits provided by Columbia University in connection with its West Harlem campus expansion. The Attorney General’s investigation found that, although there was no theft, fraud or other misappropriation of charitable assets at WHLDC, the organization’s ability to review and approve grants was hindered by the board of directors’ failure to develop clear policies and procedures for grant-making activities in conjunction with the Fund for the City of New York (FCNY), WHLDC’s “fiscal sponsor” under the CBA. The organization issued only a single grant of $302,400 between 2009 and 2011.  

“Charitable organizations have a responsibility to deliver their intended benefits to carefully evaluated applicants, while ensuring that their grant-making processes are open, transparent and free of conflicts of interest,” said Attorney General Schneiderman. “We are pleased that WHLDC has agreed to implement new policies and procedures that will now enable the benefits envisioned by the CBA to flow to the West Harlem community.”

The Attorney General’s settlement requires WHLDC to adopt grant-making procedures and corporate governance reforms to guard against improper diversions of grants and bring greater transparency to the public regarding the status and availability of CBA grant funds. Among the terms of the agreement are:

• Due diligence on all potential grant recipient organizations conducted by WHLDC and its fiscal sponsor, as well as monitoring of grants in progress.
• A robust conflict of interest policy barring WHLDC directors with a direct or indirect connection to a grant applicant from participating in decisions regarding its application.
• Grant cycles to commence promptly at the beginning of 2013, with application instructions posted on WHLDC’s website.
• Regular public disclosure of all CBA grants awarded and financial statements accounting for the uses of the benefits fund.

WHLDC’s new grant-making procedures provide for the responsible distribution of funds to other not-for-profit organizations, taking into account the fiscal sponsorship arrangement put in place by the CBA, under which the benefits fund is held and disbursed directly by the fiscal sponsor. WHLDC recently selected Tides Center and Tides Foundation, affiliated not-for-profit organizations with a long history of providing fiscal sponsorship services, to serve as its new fiscal sponsor.

The settlement announced today is binding as well on the West Harlem Development Corporation, a Delaware not-for-profit corporation that WHLDC created to be its successor entity, subject to court approval. In the event of such a transfer, WHDC is required to submit to the jurisdiction of the Attorney General’s Charities Bureau and comply with registration and filing requirements.

The investigation of this matter was handled by Scott R. Wilson, Special Counsel to the Attorney General, and David Nachman, Enforcement Section Chief in the Charities Bureau, under the supervision of Jason Lilien, Charities Bureau Chief, and Janet Sabel, Executive Deputy Attorney General for Social Justice.