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Nonprofit received taxpayer-funded grants despite late IRS filings

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Rhode Island Statehouse_176520

PROVIDENCE, RI (WPRI) — As the Center for Southeast Asians was receiving more than $1 million in taxpayer funded grant money from the state, the Elmwood Avenue nonprofit had not filed its federal 990 tax returns for a number of years – but it didn’t matter.

The Internal Revenue Service requires nonprofit organizations to file a Form 990. When the CSEA received a number of grants during the last two years, the organization had not filed a 990 since the 2012 tax year.

A relatively small chunk of the money given to the CSEA came from legislative grants granted by the General Assembly, but the bulk of it was provided by the Department of Children, Youth and Families and was the subject of a state audit released last week.

CSEA spokesman Bill Fischer said the delay in the nonprofit’s filing was “a byproduct of the audit.” Fischer said the CSEA filed an extension with the IRS and submitted its 2013 990 in August. The 2014 990 has not been filed.

Common Cause Rhode Island Executive Director John Marion questioned providing taxpayer money to any nonprofit that is not up to date on its IRS filings.

“And that’s the concern. That’s why it could be a red flag,” Marion said. “Hopefully the state is doing some due diligence to ask, is an organization being run well? Being behind on things like this might be a sign of other issues. A 990 can provide information about how an agency is run.”

CSEA – which, according to its website, promotes the prosperity, heritage and leadership of Southeast Asians – received about $15,000 in legislative and community grants from the General Assembly over the past two years. House of Representatives spokesman Larry Berman said being up to date on IRS filings is not a requirement to get a grant from the General Assembly.

DCYF granted just under $1 million to the agency during the same two-year period, and the Rhode Island Attorney General’s office gave the agency a $120,000 dollar grant.

Executive Office of Health and Human Services spokesman Mike Raia said DCYF is straightening out its purchasing protocols to ensure taxpayer funds are spent efficiently. Regarding the funds provided to CSEA, Raia said the goal in the future will be to make sure all vendors are in compliance with the law.

“We have an obligation to ensure that entities that receive any public dollars are in good standing with federal, state and local laws,” Raia said. “Upon taking office, we inherited an agency with significant challenges in contract management and we’ve since launched a comprehensive vendor compliance audit.”

In Marion’s opinion, not requiring a nonprofit to be up to date with its IRS filings is just one of many issues with the legislative grant process that’s been a concern for Common Cause for years. According to Berman, $2 million was handed out to dozens of agencies through the grants this fiscal year. All of it at the sole discretion of two people: House Speaker Nicholas Mattiello and Senate President M. Teresa Paiva Weed.

“On paper its something called the Joint Committee on Legislative Services,” Marion said. “But in reality that is divided up between the speaker of the House and the president of the Senate.”

Marion is not shy about saying what he thinks the pot of legislative grants cash is.

“It’s a slush fund. The grants are used to maintain political power. So taxpayer money is handed out for political purposes,” Marion said. “The grants keep the representatives and senators in line with the leadership.”

Rep. Grace Diaz sponsored the House grant to CSEA and Sen. Juan Pichardo sponsored the Senate grant; both are Providence Democrats. Neither one returned requests for comment from Target 12.

Send tips to Target 12 Investigator Walt Buteau at wbuteau@wpri.com and follow him on Twitter @wbuteau

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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