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Baltimore City Council moves to continue work with nonprofit involved in 'Healthy Holly' deals

The Baltimore City Council moved Thursday to extend a contract with Associated Black Charities to manage public money for youth programs, despite an ongoing city audit of the nonprofit.

Mayor Bernard C. “Jack” Young called in April for the audit of the nonprofit’s administration of a $12 million Children & Youth Fund after revelations that the group was involved in the “Healthy Holly” scandal that led to the resignation of Mayor Catherine Pugh.

The nonprofit had asked entities involved in city business to buy Pugh’s self-published children’s books.

“With an eye toward full transparency,” Young called for the audit to look at the youth fund’s first year of spending before extending the contract for a second year.

Nonetheless, the council’s budget committee, with the backing of Young, voted to continue the management contract because it was satisfied that nothing concerning had been found to date about how the nonprofit administered grants to youth-oriented community groups. A vote of the full council is scheduled for June 17.

“Were there any red flags so far?” Councilman Eric Costello, committee chair, pressed city auditors conducting the review. “I’m looking for a no.”

When auditors could not point to a problematic grant in the audit, the committee unanimously approved the extension.

There was no mention of the nonprofit’s role in soliciting funds for books or the $1.2 million it kept to administer the fund.

Associated Black Charities acknowledged in April that it bought 10,000 Healthy Holly books with nearly $90,000 from five donors, and directly distributed 4,100 to child care centers and youth-serving organizations in Baltimore and on the Eastern Shore. An additional 5,500 books paid for by its donors were to be distributed directly by Pugh’s company, Healthy Holly LLC. About 500 were water-damaged and not distributed.

Pugh, who also sold $500,000 worth of books to the University of Maryland Medical System where she was a board member, is now the target of state and federal investigations related to the book deals.

Associated Black Charities said it would return or donate $9,552 it had kept from its book deals. The nonprofit’s officials also said they would conduct their own review and have since banned deals with politicians, even if the products or services figured into the group’s mission. They had said Pugh’s health-oriented books fit its mission.

On Thursday, Costello kept the focus on the youth fund.

“I know that Mayor Young wanted to ensure that the fund was being well managed and that there were no conflicts of interest with ABC, its subcontractors or grantees,” he said after the hearing.

“He requested the city's Department of Audits conduct an audit of the records of ABC, its subcontractors and grantees with respect to matters covered under the agreement,” Costello said. “I asked today during the hearing if there were any material findings to date — as the audit is in mid-process — that raise any red flags related to the concerns Mayor Young raised in his letter and the answer was no.”

Lester Davis, a spokesman for Young, said that a recent ransomware attack on city computers had slowed the audit but that it was expected to be completed this month.

He said it was important to approve the nonprofit’s management contract now because the fiscal year begins July 1 and programming could be interrupted. And without an extension, $12 million allocated for next year would sit unused.

Further, Associated Black Charities would not be able to continue setting up a permanent mechanism for awarding grants to community groups, Davis said.

Nonprofit officials welcomed the renewal.

“ABC appreciates the opportunity to help launch the pilot year of the City's Youth Fund,” it said in a statement. “We look forward to continuing this important work in the year ahead.”

Officials with the nonprofit have said they did not intend to keep managing the fund long-term and wanted to hand off the work to another group.

The nonprofit was chosen to manage the fund after a task force concluded that past grants have not always been awarded equitably. Some groups did not have the experience or capacity to handle the accounting that comes with an award. That task force said that Associated Black Charities should help groups establish those capabilities.

“Associated Black Charities was chosen by a task force and has put significant work into building a permanent structure,” Dayvon Love, a consultant for the youth fund, told council members. “ABC is getting the ball rolling, but on June 30, 2019, the authority ends.”

meredith.cohn@baltsun.com

twitter.com/mercohn

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