BALTIMORE (WBFF) — A fund intended to support youth programming in Baltimore sent nearly $1 million in taxpayer money to a nonprofit that folded six months later and appeared to never file a tax form, raising concerns from transparency experts about how the dollars were spent.

The grant funds were distributed by the Baltimore Children and Youth Fund (BCYF), which was established in 2015 through a charter amendment that guarantees millions in funding from taxpayer dollars every year with no sunset date. The fund is not subject to the biennial performance audits of government agencies because it operates as a nonprofit.

BCYF’s nonprofit tax form in 2022 shows it sent a $900,000 grant to Thrive Arts. The IRS nonprofit database shows Thrive Arts received a tax-exempt status in August 2021. Thrive Arts had this status revoked by the IRS in August 2024 because according to government records, the group did not file a nonprofit tax form for three straight years.

The website for Thrive Arts was taken down, but an internet archive shows it provided fiscal sponsorships and nonprofit consulting for artists.

“Thrive Arts supports BIPOC artists and arts organizations with tools to build capacity, grow, and to serve their constituents at the highest level,” the website stated.

A BCYF spokesman said Thrive Arts returned the remaining grant funding when it stopped operations. However, the spokesman said information about how much of the $900,000 grant was returned to BCYF would require a public information request, which Spotlight on Maryland filed in response.

Maryland state records show Thrive Arts forfeited last year. The Maryland articles of incorporation for Thrive Arts in August 2021 listed Abdul Ali as the resident agent of the group.

Ali currently runs a consulting firm and previously worked as a program director for the Maryland State Arts Council. He referred Spotlight on Maryland inquiries to BCYF as he declined to answer questions on how much he was paid through Thrive Arts and whether the group ever filed a nonprofit tax form.

Laurie Styron is the CEO and executive director of Charity Watch, a nonprofit watchdog. She noted nonprofits are required to file annual tax forms as well as an additional tax form when they dissolve that details how their assets are distributed. She questioned how Thrive Arts was able to secure the BCYF grant in the first place.

“Typically, to receive a grant of that size, the charity has to show some kind of a track record that it’s capable of overseeing those kinds of funds and responsibly spending them,” Styron told Spotlight on Maryland. “Usually, this much taxpayer money doesn't go to an untested organization that’s small and just getting started.”

BCYF’s 2022 grant announcement on its website mentioned an award to Thrive Arts under its “president’s fund,” which it describes as an option that “offers flexibility to address pressing issues at the discretion of the President.” However, the BCYF announcement did not disclose how much money went to Thrive Arts. The announcement only mentioned the grant totals of the grassroots fund, which included $150,000 payments to 35 organizations.

Alysia Lee has served as the president of BCYF since January 2022 and has an annual salary of $172,033, according to the group’s latest tax form. Lee did not respond to a question on how she determined Thrive Arts was qualified for a $900,000 grant.

In a statement, a BCYF spokesman said the group has a thorough process of verifying potential grantees. The spokesman said Thrive Arts operated from Aug. 20, 2021, until March 9, 2023, and was awarded the BCYF grant on Sept. 1, 2022 — meaning the organization closed six months after it was given taxpayer dollars.

“The decision to award Thrive Arts a grant through the President's Fund was based on a comprehensive evaluation process, which included community feedback, a formal proposal submission, a site visit, and a thorough due diligence review of financial, legal, and programmatic documentation. Thrive Arts was granted nonprofit status on August 20, 2021, and met all eligibility criteria at the time of the grant award on September 1, 2022,” the statement to Spotlight on Maryland reads.

“The grant to Thrive Arts was to support the building of a micro-credentialing program that provides accessible professional learning opportunities to strengthen Baltimore's hyperlocal ecosystem in successfully and sustainably supporting youth,” the statement continues. “This aligns with BCYF's mission to enhance youth development in Baltimore through support for grassroots and community organizations.”

“BCYF has a robust system in place to ensure grantees use awarded funds to benefit youth in Baltimore City. This includes monthly financial expense reports, monthly employment reports, quarterly programmatic reports, annual site visits, and additional compliance requirements, such as insurance coverage and background checks, to ensure the safety of youth participants,” the statement concludes.

BCYF provided its grantees' proposed budgets in response to a public information request from Spotlight on Maryland. The documents listed the $900,000 grant in 2022 to Thrive Arts under a budget line item titled “other.”

The BCYF document listed several budget lines under Thrive Arts such as personnel, equipment, supplies, and transportation, but the entirety of the grant money was attributed to “other.” Different BCYF grantees in the provided documents listed various levels of spending under distinct budget line categories.

Styron said she finds it “highly unusual” that a nonprofit the size of BCYF does not conduct a regular performance audit, which may have helped identify concerns about Thrive Arts before the group was given $900,000 in taxpayer dollars.

“A charity’s board of directors has a duty to provide proven oversight of its grantmaking activities,” Styron told Spotlight on Maryland. “Part of that includes adequately vetting organizations to which it’s donating money. So for an organization to have only been in existence for 18 months to receive that size of a donation, there should have been more follow through there to really ensure it was prepared to be able to spend that money according to the grant agreement.”

Professor Brian Mittendorf is the H.P. Wolfe Chair in Accounting at Ohio State University and specializes in nonprofit accounting. He described the requirement for nonprofits to file a tax form as a “bare minimum” and expressed concern about BCYF’s decision to give Thrive Arts $900,000 in taxpayer dollars.

“The unusual aspect here is that not only did they not meet that bare minimum, but if they’re getting public funds, or just a grant of that size, you would expect the grant provider to provide some additional oversight to ensure those resources are used appropriately,” Mittendorf told Spotlight on Maryland. “The fact that they weren’t even in compliance with filing their financial statements indicates some concerns about whether sufficient oversight was provided with those funds.”

Mittendorf said it was ironic that Thrive Arts claimed to operate as a fiscal sponsor but never appeared to file a nonprofit tax form. He noted fiscal sponsors are typically established nonprofits that manage the finances of smaller, newly established nonprofits who have yet to receive a tax-exempt status.

“You would expect more so than other organizations that fiscal sponsors would have all these government practices in place because part of what they’re doing is adding some assurances that resources are being used appropriately,” he told Spotlight on Maryland.

Fiscal sponsorships allow smaller nonprofits to dodge filing tax forms that detail how they spend their money, according to a previous Spotlight on Maryland investigation. The spending of the smaller nonprofits is included under the fiscal sponsor’s tax form, which combines the finances of its clients.

BCYF’s latest nonprofit tax form ending in June 2023 shows $14.8 million in government funding and only $3,535 in donations from other sources. The group’s two remaining tax forms in previous years reveal exclusively government funding.

The 2023 tax form shows BCYF spent $9.2 million on grants to local organizations. The remaining $5.6 million, which accounts to roughly 38% of its spending, was used for administrative expenses, salaries and management fees.

Pete Sepp, president of the National Taxpayers Union, said BCYF’s grant to Thrive Arts exposes a need to revamp the program to ensure an efficient use of taxpayer dollars.

“The Baltimore Children and Youth Fund is going to have to have more transparency,” Sepp told Spotlight on Maryland. “There simply can’t be this kind of attitude toward taxpayer dollars being if not misspent, then certainly poorly spent. Taxpayers deserve better. Children deserve better.”

Previous Spotlight on Maryland investigations exposed how BCYF used taxpayer dollars to cover out-of-state trips for adults. This included spending roughly $55,000 for travel, hotels, and meals for its 30-member racial equity committee to attend a racial equity conference in Missouri last year. Another trip took 100 community leaders to The Legacy Museum in Alabama last year, which included a $3,600 expense for three yoga sessions and one “short breathing exercise.”

Former Baltimore City Mayor Bernard C. “Jack” Young, who led efforts to establish BCYF, said he was displeased with how the fund currently operates.

“Right now, [BCYF] is not anything that I envisioned,” Young previously told Spotlight on Maryland. “That fund was created so that community-based organizations could get funding for the programs they had for the youth. Not a junket for grownups.”

David Williams, the president of the non-partisan Taxpayers Protection Alliance, said the $900,000 grant to Thrive Arts proves that Baltimore City needs to utilize BCYF within the scope of the government rather than a nonprofit.

“The city needs to take control of this process,” Williams told Spotlight on Maryland. “If the city agency gives out the money, then there’s more control over the process, there's more transparency. When you are contracting these services out to a nonprofit, you are losing control of the whole process of money being spent.”

A previous version of this story stated Thrive Arts closed 18 months after receiving its $900,000 grant from the Baltimore Children and Youth Fund. Thrive Arts operated for roughly 18 months but folded six months after receiving its grant.

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