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City inspector targets contributions to Maggie Daley’s charity

Maggie Daley  |  Rich Hein~Sun-Times

Maggie Daley | Rich Hein~Sun-Times

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Updated: January 23, 2012 3:45AM

After School Matters, the charity founded by Chicago’s former first lady Maggie Daley to occupy and educate teenagers, received $915,000 in contributions over a ten-year period from companies that got subsidies from the city, the city’s inspector general concluded Tuesday.

In the latest in a series of politically-explosive audits, Inspector General Joe Ferguson concluded that After School Matters was named the recipient of charitable contributions under “public benefits clauses” in city redevelopment agreements more often than any other entity.

Even more troubling, recipients of tax-increment-financing subsidies interviewed by Ferguson’s investigators reported that, in the vast majority of cases, under the public benefits clause, the non-profit recipients were “unilaterally chosen” by the city with no specific standards for making those decisions.

“With no internal accountability for the selection of non-profit entities, nor any published guidelines or criteria by which to evaluate programs named in public benefits clauses, the public benefits program remains vulnerable to mismanagement and the appearance of preferential treatment for select charities,” Ferguson wrote.

“The IGO did not review and, thus, does not raise any question about the value of work done by After School Matters. [But]… the lack of transparency and accountability in the public benefits process raises an appearance of preferential treatment for selected private non-profits. ... Such appearances are only exacerbated by After School Matters’ close ties to the city and utilization of a city employee to oversee its grant writing and fundraising.”

After School Matters was an outgrowth of Gallery 37, the award-winning arts and education program at Block 37 in the North Loop. The charity celebrated its 20-year anniversary last month at a gala attended by Mayor Rahm Emanuel and many of the city’s movers-and-shakers.

The non-profit had an annual operating budget of $27.5 million in 2010. Since 2004, the organization has received more than $54.5 million in city funds through eight city grants for operating expenses and special programs, according to the inspector general’s report.

The most recent grant — for nearly $6.5 million — was made on May 12, just four days before Maggie Daley’s husband, former Mayor Richard M. Daley, left office.

So-called “public benefits clauses” are terms of redevelopment agreements, grant agreements and land sale contracts that obligate recipients to donate money to specific charities or public programs as a condition of receiving a city subsidy.

From 1985 through 2009, 73 redevelopment agreements included public benefits clauses, with 27 of those agreements directing cash to private non-profits. All but one were signed in the ten-year period ending in 2009.

After School Matters was the designated beneficiary in 16 of those 27 agreements, 59 percent of the time, receiving $915,000. Only the Leland Apartments Developments got more, with a single donation of $1.25 million.

During the course of his investigation, the inspector general interviewed representatives of ten developers, nine of whom agreed to make charitable contributions to After School Matters. All but one of those corporate officials reported that the city “unilaterally chose” the non-profits named in the public benefits clause.

The one corporate executive who denied city involvement previously served as a deputy chief-of-staff under former Mayor Richard M. Daley and “was familiar” with the work of After School Matters.

To avoid similar conflicts, Ferguson recommended that Mayor Rahm Emanuel either stop designating private entities as charitable recipients as part of TIF agreements or develop specific criteria for selecting those charities.

The mayor said he would study the report before making a determination on the issue. But, he noted that within his first three days in office, he appointed a board to “reform TIF’s so they were focused on economic and business and job creation and weren’t an instrument of politics or political favoritism.”

“When the public can’t see how their money is used to leverage benefits for public private entities, we have a transparency issue,” Ferguson wrote.

“When the IGO can’t get an answer as to how those private entities are chosen, we have an accountability issue. When the city’s administrators aren’t able to explain the final outcomes, we all have cause for concern.”

After School Matters released a statement saying that the impression that donations to the charity are a condition of receiving TIF funds “is flat-out false, and the report itself makes that point.

“It is also an insult to the work that former First Lady and After School Matters Chair Maggie Daley continues to do for the youth of this city,,” the statement said. “ Since 2003, After School Matters has offered more than 200,000 out-of-school program opportunities for Chicago teens. ...Teens who participate in After School Matters consistently demonstrate better attendance, higher graduation rates and fewer course failures than their counterparts who are not in After School Matters.”

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