Do You Rob Peter To Pay Paul?

This is the six million dollar question… The Daily News continues its reporting on the accusations of financial mismanagement of the Los Angeles Homeless Services Authority (LAHSA). Here is the article.

They report that LAHSA used HUD (federal Department of Housing and Urban Development) funds to pay items (“emergency bills”) that in HUD regulations violated federal rules. In other words… they “commingled” funds. HUD did not know about it.

LAHSA “commingled” $1.7 million in HUD funds. The consequences of these actions could be HUD suspending LAHSA from receiving HUD funds (approximately $60 million per year) or making LAHSA return the $1.7 million.

This is a good (or really bad) case study on nonprofit management…

Do you take funds from another source to pay emergency items, like paying homeless agencies their bills before they go out of business? Even though using these funds could risk losing future funds?

I don’t think so…

Risking $1.7 million (or worse) is not worth it. Creative management would mandate that you don’t do something illegal to keep the doors open. (The ends don’t justify the means.)

Take out a line of credit, or borrow money from a government or private entity until the financial issues are resolved. But don’t do anything that risks funding for homeless services in Los Angeles County. It is just not worth it…