Acting Baltimore Mayor Bernard C. “Jack” Young has ordered an audit of Associated Black Charities’ management of the city’s Children and Youth Fund because the organization asked businesses with city contracts to buy copies of Mayor Catherine Pugh’s self-published children’s books.
Young said he also will hold up legislation that would renew Associated Black Charities’ arrangement to oversee the $12 million fund until the examination by the city’s audit department is finished.
“I want to make sure the fund is being well-managed and that there are no conflicts of interest,” Young said in a letter sent this week to the nonprofit organization.
An Associated Black Charities spokesman said the organization “will cooperate fully with all official inquiries and investigations.”
The order for an audit comes after The Baltimore Sun reported Associated Black Charities collected nearly $90,000 from five entities — including CareFirst BlueCross BlueShield, which provides health insurance to city workers — to buy and distribute 10,000 copies of Pugh’s books between 2011 and 2016. Associated Black Charities forwarded nearly $80,000 of that to Pugh’s company to pay for the “Healthy Holly” books.
The Baltimore Board of Estimates, which was controlled by Pugh as mayor, awarded Associated Black Charities control of the youth fund in January 2018. The agreement included $1.2 million for the nonprofit’s administrative costs.
“Various news reports have noted that Associated Black Charities (ABC) received money from several entities in exchange for distributing copies of Catherine Pugh’s ‘Healthy Holly’ books,” Young said Thursday in a statement. “I am aware that these payments came well before ABC was selected to administer the youth fund. I have no concern that ABC’s management of the youth fund is related in any way to its relationship with Catherine Pugh or Healthy Holly LLC.”
Even so, Young said, he believes an audit is necessary.
“It is of the utmost importance that this fund continues to benefit the children and youth of Baltimore city,” he said. “This fund represents our dedication to serving the youth of this city. Therefore, it is important to maintain the public’s confidence that the historic Children & Youth Fund is managed appropriately.”
Lester Davis, a spokesman for Young, said the acting mayor does not expect that the audit will delay the distribution of grants from the fund to city organizations that help children.
The Baltimore City Council and the 16-member Baltimore delegation to the House of Delegates called Monday on Pugh to resign.
Pugh and the University of Maryland Medical System have been under fire since The Sun reported last month that nine of its 30 board members, including Pugh, had deals benefiting their private companies with the hospital network they were tasked with overseeing. Three board members, including Pugh, resigned from the board, while four others were placed on leave. The medical system’s CEO also has been placed on leave.
The hospital network paid Pugh $500,000 to produce 100,000 “Healthy Holly” books to send to the Baltimore school system; the mayor acknowledged last month that she didn’t deliver thousands of them. School officials have called the books they did receive “unsolicited” and say 8,700 copies are in a warehouse.
Health insurer Kaiser Permanente also said last week that it bought roughly 30,000 copies of Pugh’s books, paying her a total of nearly $200,000. Pugh voted in 2017 to approve a $48 million contract for Kaiser Permanente to provide insurance to city employees.
Columbia businessman J.P. Grant also said last week that his company paid $100,000 to Pugh’s Healthy Holly LLC in 2016. He said didn’t receive documentation of how the money would be used. His Grant Capital Management has financed millions of dollars in deals for state and city agencies in recent years.
In interviews, the co-chairmen of the task force that created the youth fund said Associated Black Charities was chosen for its commitment to racial equity, not because of any connection to Pugh.
Task force co-chairman John Brothers, who also oversees T. Rowe Price Group's philanthropic activities, said the leaders of Associated Black Charities were initially hesitant to get involved with the fund.
“It was not something they wanted to run long-term,” Brothers said. “The role of ABC was to start implementing grants and to build an intermediary structure that someone else could take over and ABC could move out.”
But Brothers said he thought an audit sounded like a good idea.
“As someone in the nonprofit field a long time, I think it’s always a good idea to look under the hood and audit, especially if it involves taxpayer dollars,” Brothers said. “It’s just good practice.”
Task force co-chairman Adam J. Jackson, CEO of the Baltimore grassroots think tank Leaders of a Beautiful Struggle, said he recommended Associated Black Charities for the fund’s management and the mayor did not influence his recommendation.
“The goal was to hedge against insider dealing in philanthropy,” Jackson said. “Black organizations just didn’t have access. We wanted to create a new institution with racial equality at its root.”
He said he didn’t believe the “Healthy Holly” books had anything to do with the youth fund.
“I recommended ABC because we wanted a racially equitable fund focused on residents and the community and none of the other philanthropic organization do so,” Jackson said. “Based on everything I’ve witnessed with the youth fund, they [Health Holly and the youth fund] shouldn’t even be mentioned in the same conversation. They have nothing to do with each other.”