The Coalition of Neighborhood Councils, a prominent southeastern San Diego nonprofit, has lost much of its funding and scaled back services since its board of directors fired its executive director last year and took over its daily operations.

It stopped providing a nutritional meals program to kids when state authorities demanded numerous reforms. It told city officials it wouldn’t be able to use city funding to improve its building’s energy efficiency. And it hasn’t asked some of its traditional donors to renew their contributions.

Just two years ago, tax records show the nonprofit reported $1.4 million in revenue. As of Monday, the nonprofit told residents it had less than $400,000 of dedicated funding. It’s cut staff from 23 to seven.

Even longtime CNC supporters like the Jacobs Family Foundation have scaled back funding recently. The foundation’s spokeswoman, Tracey Bryan, said the CNC hasn’t requested funding for this year. Several other private donors from recent years echoed that silence.

“I know there’s been a lot of difficulty there,” said Peter Ellsworth, president of the Legler Benbough Foundation, “but we haven’t received a request for funds.” During the previous three years, the foundation awarded the CNC $100,000 in total to support its operations.

The CNC represents 23 neighborhoods in southeastern San Diego and, in recent years, had been a unifying voice aimed at empowering some of the city’s poorest residents. It provided social services like numerous other nonprofits in southeastern San Diego, but also lobbied City Hall for money to fund development and beautification projects and dedicated administrative support to neighborhood planning groups that lacked city resources.

But in recent months, more residents — and funders — have been questioning whether the nonprofit can follow through on its promises.

The nonprofit’s board, led by Chairwoman Barbara Howard, acknowledges the problems and has tried to reconcile with critics by asking them to join in rebuilding the organization.

“We have been under siege in this organization for the last year,” Howard said at a community meeting with residents Monday. “Please come in and feel free to do something except critique.”

The CNC was founded in 1994 as a grassroots organization to support southeastern San Diego’s community councils and advocate on their behalf. Its board of directors is composed of southeastern residents elected by their peers, people who don’t necessarily have an expertise in budgets or nonprofit grant writing. Those duties were meant to fall on the shoulders of the nonprofit’s executive director, but the board of directors hasn’t hired a new one since December.

The last executive director, Dwayne Crenshaw, was fired abruptly for reasons that still aren’t entirely clear. Crenshaw later sued the CNC for wrongful termination, alleging he was fired for being gay. The CNC and Crenshaw settled the lawsuit earlier this month.

Howard said the board of directors decided not to replace Crenshaw because it doesn’t have the funding anymore to pay for an executive director. The board also wanted to play a greater role in the nonprofit’s daily operations.

“We’re a grassroots organization,” she said. “There’s no better way than planting a seed for growth than getting in and getting dirty yourself.”

Some of those first decisions involved cutting programs to the community.

This summer will be the first summer in several years that the CNC won’t provide a nutritional meals program to kids throughout southeastern San Diego. Other programs are offered through the city and the San Diego Unified School District, but they don’t specifically focus on southeastern neighborhoods.

Howard said the CNC decided not to apply to provide the program again this summer because it would have been more work than reward.

Phyllis Bramson-Paul, who oversaw the program for the California Department of Education, said the CNC would have needed to bring the program up to par with federal accountability standards. She said it had failed to meet some standards in previous years, even when it had an executive director, and state officials were fed up with seeing the mistakes ignored.

In order to make sure funding is being spent correctly and agencies are meeting their goals, the federal government requires that meal providers follow certain rules. The program is meant to help poor families, so providers must document the kids’ eligibility. In order to be reimbursed for food expenses, providers must accurately report the number of meals served to kids.

“We found problems with Coalition in virtually all of these areas. We had problems going back to 2005 with their documentation,” Bramson-Paul said.

In some cases, the CNC didn’t keep menus to document what food had been available for kids to eat. That meant authorities couldn’t verify whether each meal was actually nutritional and included the required balance of protein, grains, fruits and vegetables.

Bramson-Paul also said authorities found sanitation problems, such as food being prepared in an unclean environment, which increased the risk of a food-borne illness. And the CNC tended to inflate the number of kids who received meals and try to claim larger reimbursements.

For example, Bramson-Paul said state authorities would randomly attend sites where the CNC had scheduled to provide meals to kids. Authorities would go to a site, find no kids receiving meals but then later get a reimbursement claim from the CNC.

“The various child nutrition programs can be complicated to administer. It’s not uncommon for us to find problems in any one of these areas,” Bramson-Paul said. “The problem was the level of repeat findings and the magnitude.”

The CNC received $201,000 in federal funding, administered by the state, last year for the nutritional meals program. The previous year, it got more than $300,000.

In other cases, the CNC turned down grants it was awarded because it decided it could no longer follow through with the service. The city of San Diego awarded the CNC a $203,000 grant to install solar panels at the Tubman-Chavez Multicultural Center, a city-owned building the CNC leases, to cut down on energy costs.

“They have informed us that they cannot use the FY11 funding due to not having an agency director — so they probably will not spend the $203,344 grant,” Beth Murray, deputy director for the city’s Planning and Community Investment Department, wrote in an e-mail.

When asked why the CNC would turn down the grant, Howard said the board of directors still planned on securing those funds.

But the CNC has a history of not using city grants. The city awarded the CNC a total of $105,000 to renovate and operate the center in the previous four years and the nonprofit has recouped just half the money, city records show.

The only organization that continues to fund the CNC is the San Diego Workforce Partnership, but even in that case, the CNC has scaled back on the programs it funded. It could have received funding for a hire-a-youth program this year, but elected not to, said Nathaniel Buggs, chief operating officer of Workforce Partnership.

“They just had so much going on at that point in time,” Buggs said. “They decided it was not in their best interest.”

Buggs said his main concern is making sure the money the Workforce Partnership has provided the CNC for youth programs ends up going to youth, and not some other operational expense to solve the nonprofit’s financial woes. The Workforce Partnership programs aim to stop kids from joining gangs and to get high school dropouts a GED.

“CNC is serving a tough population, gang affiliated youth, and they’ve really worked hard despite some of their administrative challenges,” Buggs said. “Right now, they’re in good standing, but I’m well aware that some of the challenges that the organization has been going through.”

Amid the funding concerns, some residents are now calling upon the CNC to dissolve into two separate organizations. One organization would focus on buttressing the political power of small neighborhood groups called town councils and the second would emphasize providing the community with social services.

The proposal came from a task force that residents had formed to investigate tensions in the community and recommend solutions. Kathleen MacLeod, who presented the proposal, said splitting the organization would allow one of the new boards to focus on grant funding.

The next meeting to discuss the nonprofit’s future is scheduled for 6 p.m. on July 23 at the Tubman-Chavez Multicultural Center.

When residents at this month’s meeting asked Elaine Kennedy, the CNC’s finance committee chairwoman, about the state of its budget, she painted a bleak picture.

“I don’t know if we’ll break even,” she said. “At this point, we have enough to try to stay ahead of our restricted funds.”

Correction: The original version of this story has been updated to more accurately describe who formed the CNC’s task force. We regret the error.

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