Waste of the Day: Non-Profit CEO Profits
A Los Angeles homeless nonprofit funded by taxpayers paid $1.7 million to for-profit companies owned by its CEO, according to an investigation by the Los Angeles Times.
The most recent tax filings for A Step to Freedom show the nonprofit brings in more than $5 million annually, mostly from taxpayers, a large portion of which comes from the county.
It’s used to operate six housing sites for roughly 200 people.
For the past three years, the nonprofit bought food from two of CEO Kenya Croom’s other businesses at a daily cost of $18 per shelter resident.
Several residents criticized the meals. One said he found mold on sandwich bread, while others described the food as dry, bland or occasionally unavailable. Other residents said the meals were decent or above average.
Croom defended the purchases, telling the Los Angeles Times that her companies were able to provide food at a lower price than any other vendor. She said a competitor, Factor and Thistle, told her they have charged $30 per person — but Factor and Thistle told the Los Angeles Times they had no record of preparing a quote for Croom.
Croom said the failure to disclose her ties to the companies on tax filings was an accident. Her chief of staff, Larry Earl, said Croom was not involved in A Step to Freedom’s decision to contract with her companies.
After the Los Angeles Times began asking questions, A Step to Freedom said it disclosed the potential conflict of interest to the Los Angeles County Department of Human Services. The county identified three other conflicts of interest in A Step to Freedom’s vendor spending and ordered the nonprofit to repay $82,800 to the county. It’s unclear what the conflicts were.
Croom earns a $120,000 salary for her nonprofit work and a $100,000 salary from her for-profit businesses, according to the Los Angeles Times.
Background: A Step to Freedom’s issues are part of broader accountability problems within California’s homelessness spending. An audit from 2024 found the state had no idea if its $24 billion investment in housing programs had any impact. The next year, another audit found the city and county of Los Angeles could not identify how it had spent $2.3 billion for homelessness service in just one year.
Summary: Accountability is insufficient when taxpayers need a newspaper investigation to learn that a nonprofit CEO is paying her own companies with public funds.
The #WasteOfTheDay is brought to you by the forensic auditors at Open the Books. Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com.
