The San Francisco AIDS Foundation's decision to further slash its staff and chop client services is disturbing ("SFAF to cut services and staff," B.A.R., January 30). Particularly troubling - though not particularly surprising - is that SFAF's executive director, Pat Christen, is not telling us the whole truth: Known facts presented here counter misinformation currently being misrepresented by SFAF.

SFAF's reported $700,000 shortfall is suspicious. On February 14, 2002 DPH threatened to cut a $383,179 contract to SFAF for emotional and practical support; by the time the Health Commission approved this contract in November 2002, the contract had doubled to $769,621, presenting SFAF a windfall of $380K not planned for in its current budget. So why is SFAF now claiming a $700,000 shortfall?

Last September, SFAF released its current year budget to the public fully three months late, claiming it wanted to ensure its revenue projections were realistic. The current FY budget [July 2002 to June 2003] was set at $20,729,115; down $3.8 million from the $24,614,287 budget for FY '01-'02, not the $2.5 million gap reported last week. The actual difference between the two periods should have been $4.9 million, but in order to hide from the public its dire financial condition, this year's budget included an extra $1.02 million, by combining its separate HIV Prevention Project (needle exchange) affiliate's budget into SFAF's master budget.

Subtracting the current $700,000 "shortfall" and next year's reported budget deficit of $1.6 million, one would expect the current year budget of $20.7 million would only shrink to $18.4 million next year, rather than the reported $16.6 million, unless of course there's an unreported additional budget deficit of $1.8 million SFAF has not acknowledged. That said, this prominent AIDS organization has seen its budget plummet $8 million (from $24.6 to $16.6 million) across a mere three years, despite padding its budget by incorporating the HPP affiliate budget. This cannot all be explained by Christen's reported weak excuses, and the answer lies, in part, by examining - in Enron vs. Arthur Anderson fashion - SFAF's financial docments.

By comparing SFAF's last three audited financial statements, we learn SFAF's total net assets stood at $7.9 million at the end of June 2000; at the end of June 2002, PriceWaterhouseCoopers (its new auditor) reports SFAF's net assets total $3.7 million, as of June 2002. (SFAF's previous auditors, Deloitte & Touche, were sued by Adelphia Communications in November 2002 for failing to report self dealing, financial chicanery, professional negligence, and breach of contract).

In this two-year period, SFAF potentially either released from restrictions, or sold off, $4.16 million in total net assets. Shockingly, during a single FY, between June 2001 and June 2002, SFAF's cash and cash equivalents soared $1.83 million, from $547,359 to $2,380,078 - a disturbing feat when total net assets simultaneously plummeted. What has SFAF done with the unexplained missing net assets, and the infusion of cash and cash equivalents? Packed it into a carpetbag, intending to flee the area? SFAF has slashed, and continues to slash, both staff and direct services from its Bay Area presence in order, possibly, to divert resources to its newest non-profit "affiliate" - the Pangaea Global AIDS Foundation.

According to a November 18 New York Times article, SFAF "… diverted $1 million of its money to help establish Pangaea, an affiliate with its own board and Ms. Christen as president." Does this mean she now earns two salaries, one at Pangaea and one at SFAF? The $1 million diversion is not substantiated, however. According to the PriceWaterhouseCoopers audited report dated October 2002, SFAF provided grants to Pangaea totaling $5.92 million, in addition to having grants payable to Pangaea at the end of June 2002 of $2.86 million. Grants awarded to, and grants remaining payable to, Pangaea total $8.78 million.

Of this amount, only half of the grants have been forthcoming from an $11 million grant Pfizer Corporation gave SFAF to launch Pangaea. The audited statement reports that as of June 2002, Pfizer had released only $4.4 million to SFAF to march over to Uganda. To award $8.78 million to Pangaea, SFAF dipped into its own funds - total net assets, cash and cash equivalents, etc. - to cover the remaining $4.4 million, despite SFAF's promise to its own Board of Directors it wouldn't divert funds intended for the Bay Area to its overseas operations, unless revenues were realized. Small wonder SFAF has chopped its staff, and disturbingly, services to clients, in the Bay Area.

The Times article further reported that "Ms. Christen said some people at the foundation were wary about telling donors that money was being spent overseas. 'But we've always been very honest with our donors about what we do with our resources,' she said." Well, um, no! SFAF has not been honest with its donors, any more than it is now being "honest" with the Bay Area Reporter or SFAF's Bay Area clients. Various SFAF fundraising promotional materials I have accumulated have not once told people registering for its AIDS Walk, its new LifeCycle or its old California AIDS Ride, nor its AIDS Marathon that any portion of funds raised would be sent overseas. SFAF's pre-event come-ons always promise: "Come walk/ride/marathon with us; your efforts will assist 36 Bay Area beneficiary organizations helping people living with HIV/AIDS in the Bay Area." Not other promises.

The Bay Area is facing massive federal, state, and city AIDS service cuts. SFAF's cash-laden carpetbags should focus on Bay Area needs, not be capetbagged overseas.

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Patrick Monette-Shaw is an AIDS funding accountability watchdog; for specific details on service cuts
proposed by SFAF, see related article on page 2 [of the 2/6/03 B.A.R.]

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