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Strong City Baltimore exits fiscal sponsorship work, which fueled its growth but caused financial grief for clients

The nonprofit Strong City Baltimore says it is getting out of the business of managing other program’s finances, known as fiscal sponsorship, which fueled the organization’s growth but caused financial headaches for the grassroots programs it served.

Strong City at one point helped more than 150 small- to mid-size programs with accounting, money management and other administrative tasks. In 2019, the organization said it was managing $14 million of its clients’ assets.

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But last year, groups began to speak out, saying Strong City’s accounting of their finances was in hopeless disarray, upending important community work involving at-risk, mostly Black children.

Now Strong City says it will abandon that work altogether, as affected groups say they remain in trouble.

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“We’ve been in a period of self-reflection about our mission, and we made a decision, although not an easy decision, that it was time for us to go back to our core work, and that is around community building and strengthening Baltimore neighborhoods and supporting leadership around the city,” Strong City CEO Reginald Davis said.

The organization, which has been under new leadership and steady staff churn since last spring, previously announced that it had hired an accounting firm to untangle its fiscal sponsorship accounting woes, and said it had “made a significant amount of progress” in that effort.

“We have a clear accounting of our finances,” Davis said.

Not so, say the leaders of groups who say Strong City undercut their work.

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“There’s been no progress. Nothing. Zero communication,” said Kevin Anderson, who ran NEWfit, which provided after school fitness programs and was one of Strong City’s largest managed programs. “A year later, we’re all in the same boat. They pretty much ghosted us and are gaslighting us or telling flat out lies.”

Linda Keely, a member of the board of directors of the Maryland Philanthropy Network, has been trying to assist some harmed organizations and calls what’s happened “heinous.”

“This is clearly a systemic issue, clearly based in race,” Keely said. “It’s hard to imagine that if these organizations were white organizations with assets in the bank, that there wouldn’t have been accountability, transparency and restitution at this point.”

Davis said Strong City has “tried to be responsive, tried to address project concerns to the best our abilities, and moving forward we are going to continue to do that.”

Kathryn Cooper, who runs a group called Sisters Saving the City in Park Heights, said Davis has been more available than the previous Strong City leadership and is working to iron out problems. Davis was hired as chief of staff to longtime CEO Karen Stokes in late 2019; he took over as interim CEO last spring, and was given the job permanently last month.

Meanwhile, Davis said Strong City believes some groups owe it money.

“There are still projects who are unclear about why they might owe Strong City funds. We are working case-by-case with those projects to address any discrepancies,” he said.

Fiscal sponsors play a key role in helping smaller groups obtain and manage funding. Many small programs are not registered as 501(c)(3) nonprofits and so legally can’t accept certain types of funds. Funders also might be wary of giving cash to groups with a short track record. Fiscal sponsors take on a program’s financial, human resources and legal aspects so program leaders can focus on their mission in exchange for 10% to 15% of revenues.

“The sole reason a lot of people get fiscal sponsors isn’t because we don’t have the knowledge — it’s because we don’t have the capacity to do it, and that’s why we pay them to manage our finances so we can focus on the meat and potatoes, which is serving the community and our programs,” said Kim Sauer, co-founder of a program called Fearlessly Loving Yourself.

Sauer, who doesn’t get compensated for her work with the program, said she took 80 hours to conduct a forensic audit of her financials. She believes Strong City owes her program $7,000, “resources that could’ve been shared with families,” but said she has little hope of recovering it.

Strong City has acknowledged that rapid growth led to problems but blamed other factors as well, saying the May 2019 ransomware attack on Baltimore slowed its work, as did delays in disbursing Baltimore’s Children and Youth Fund in part because of the fallout last year of former Mayor Catherine Pugh’s Healthy Holly scandal.

Stokes, the former CEO, told The Sun last year that Strong City also was not charging programs as much as it should have, and advanced money to clients before grants were in hand.

One of its largest former partner organizations, Baltimore Corps, told The Sun that as far back as 2017, Strong City was missing payrolls, providing weak accounting and generally mismanaging its funds.

Strong City’s next moves are unclear. Davis said the organization will be “engaging in very deliberate conversations with various partners and groups around the city to ask the question, how can we support their work. And that process will help us determine what that looks like moving forward.”

Sixty programs remain in Strong City’s fiscal sponsorship program, and will have to find new sponsors. There are other groups, like Fusion and Bmore Empowered, who provide fiscal sponsorship.

Davis conceded that cutting out fiscal sponsorship would cause Strong City to have to “align our resources appropriately.”

“We’ve been right-sizing the organization over the last three months,” he said.

Strong City will continue to run programs such as its Adult Learning Center and the Club at Collington Square, and its annual Neighborhood Institute, which in the past has trained hundreds of grassroots and nonprofit leaders. They say they’re returning to their core mission, dating back to when the group was known as the Greater Homewood Community Corp.

Anwar Young, who recently became chair of Strong City’s board of directors, said the organization is on “firm footing.”

Nyah Vanterpool said he saw Strong City’s problems from both the inside and outside — he worked for Strong City from 2011 to 2013, and again from 2018 to 2019, before joining Anderson’s NEWfit as deputy director.

“One of my fears is ... that the organization is moving forward with this sense of plausible deniability, passing the buck and the blame to project leaders rather than being accountable for maladministration,” he said. “They’re accusing organizations of being indebted when they know they mishandled accounts receivable, and they know they misallocated management fees and restricted funds.”

Though Cooper praised Davis for being more accessible than his predecessor, her Sisters Saving the City program remains in limbo because, she said, funders won’t give money while she’s associated with Strong City.

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“They say, ‘Don’t call us if you’re associated with Strong City Baltimore,’” said Cooper, who says she hasn’t been able to get another fiscal sponsor to take on her program.

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Anderson’s after school fitness program, which once served 10,000 children, “has all but tanked,” he said, so he has returned to teaching. He said the pandemic was a major factor — but so was Strong City.

“They made it worse for us,” Anderson said.

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