US

Non-Profit Failed Freddie Gray’s Neighborhood, Still Gets HUD Millions

A liberally funded anti-poverty group’s plan failed miserably to revitalize the destitute Baltimore neighborhood where Freddie Gray lived but the non-profit continues to pay its officers lavish salaries with one top executive earning more than $1 million in 2014.

Columbia, Md.-based Enterprise Community Partners conducts anti-poverty projects nationwide, but it lost the battle in its own backyard in Sandtown-Winchester — the Baltimore neighborhood that was once home to former Supreme Court Justice Thurgood Marshall and entertainer Billie Holiday. Gray died there after suffering a spinal cord injury while in police custody in an incident that sparked violent riots across Baltimore earlier this year.

Enterprise’s extravagant salaries reminded conservative think tank Capital Research Center Executive Vice President Scott Walker of Thomas Sowell’s “Poverty Pimps” — a 1998 poem about profiting from the poor.

Enterprise partnered with then-Baltimore Mayor Kurt L. Schmoke in 1990 to revitalize Sandtown-Winchester on four fronts: community building, housing and economic development, health services and education. More than $130 million of public and private money was invested in the neighborhood, which built more than 1,000 homes and bolstered public schools.

But the project ran out of steam by 1999 when Schmoke was succeeded by Martin O’Malley. The new mayor – who would become Maryland’s two-term governor and a 2016 presidential hopeful — had his own redevelopment plan that refocused funding away from Sandtown-Winchester.

Enterprise ultimately abandoned the project as the public-private partnership fell apart, but the nonprofit marches on with multiple nationwide anti-poverty crusades, paying its executives generously, thanks in part to its status as one of only three non-profits eligible for certain Department of Housing and Urban Development funds.

Meanwhile, any improvements Sandtown-Winchester saw were likely unrelated to the revitalization effort, if not all together failures, according to a 2013 Abell Foundation report.

Charles R. Werhane is listed as an Enterprise “trustee” on tax forms, but he is actually president and CEO of the subsidiary Enterprise Community Investment Inc. He was paid more than $393,000 in 2014 with a $287,000 bonus, according to the group’s 990 tax form. After adding other benefits, his total compensation exceeded $1 million. Sandtown-Winchester’s median household income is $26,187.

Enterprise Community Investment’s 2013 990 lists Werhane as the president and CEO with an identical compensation as on its parent group’s tax form that year.

Enterprise CEO and president Terri L. Ludwig was paid more than $424,000, with a bonus in excess of $114,000 bonus. Her total compensation was $577,000 — and 22 times more than Sandtown-Winchester’s median household salary.

Enterprise’s 48 top officers were paid nearly $267,000 in 2014 on average.

“That is ridiculous,” said Capital Research’s Walter. “Presumably, the main value that they’re adding to the world is that they pass money along to help people. The salaries are just the single-most egregious thing.” Walter said the non-profit has an alarming excess of officers.

“Enterprise is working to end housing insecurity in the U.S. within a generation,” the nonprofit’s website said. “That means no more homelessness. We are driven by our mission, fueled by business discipline and sustained by donors and investors.”

More than $33.2 million, or nearly half of Enterprise’s 2014 $69.3 million total revenue, came from government grants, according to its 990 tax form. But the nonprofit only distributed $17 million to groups fighting poverty.

Meanwhile, $27.4 million, or 40 percent of the Enterprise’s revenue, went to salaries and employee benefits.

“The ratio there is staggering,” Walter said. He also noted that overhead typically costs between 20 and 30 percent of a nonprofit’s revenue.

Conversely, Local Initiatives Support Corporation — a nonprofit with a similar poverty-fighting mission as Enterprise — paid its president and CEO Michael Rubinger around $489,000, while its equivalent to Werhane made around $660,000 in 2013, according to the nonprofit’s most recently available 990.

Yet, LISC’s 2013 revenue was more than $141.3 million, which was $72 million more than Enterprise that year.

Enterprise, LISC and Habitat for Humanity are the three groups eligible for HUD’s Section 4 community development grants.

Yet searching the HUD inspector general’s website reveals no audits of Enterprise, though online records are only available through 2006.

“I would argue that HUD is the most egregious of all federal departments,” Walter said. Government “never cares about successes and failure. The IG is failing as badly in their job as Enterprise is.”

The Sandtown-Winchester revitalization venture — an all-encompassing endeavor that included efforts to increase homeownership, improve education and welfare and decrease unemployment — was the dream of Enterprise’s founder, Maryland community planning visionary and Columbia architect, Jim Rouse, who was later awarded the Medal of Freedom in 1995 by President Clinton.

“He has made our cities and our neighborhoods as beautiful as the lives that pass through them,” Clinton said when awarding the medal. “I think if every American developer had done what James Rouse has done with his life, we would have lower crime rates, fewer gangs, less drugs.”

Rouse partnered with Baltimore City and other nonprofits to revitalize Sandtown-Winchester in 1989. Besides building new homes and bolstering public schools, the project offered tax credits to employers who hired the neighborhood’s residents.

Former President Jimmy Carter joined the effort in 1992 by helping build Habitat for Humanity homes in the neighborhood, calling his role a “drop in the bucket.”

Still, Sandtown-Winchester showed no more improvement than other nearby neighborhoods that didn’t receive such revitalization efforts, according to multiple reports.

“The neighborhood still lagged behind the rest of the city and metropolitan area in important ways,” according to the Abell Foundation report. “The median household income increased slightly between 1990 and 2000, but remained well below city and metropolitan averages.”

Any improvements, such as the eight percent decline in the poverty rate was “not unique” when compared to similar nearby neighborhoods, such as Greenmount East and Penn North.

Also, “the fluctuation in housing prices in Sandtown-Winchester was more likely due to the local economic climate than to any neighborhood-specific reforms,” the report said.

Likewise, “the persistent difficulties to reach state and federal benchmarks for achievement tests show that the Sandtown schools have not reached the performance level of other city and metropolitan schools,” the report said.

Enterprise did not respond to multiple requests for comment.

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