After Laying Off At Least 48 Employees, and Massively Chopping Bay Area Services, SFAF Grants Its African Affiliate, Pangaea, $22.4 Million – $36 Million Dedicated to the Clients and Staff of Bay Area AIDS Service Organizations Held Hostage by SFAF's “Grantee Model” Grantmaking

TheLastWatch Analysis Artful Deception?: "Grants Payable" Hidden In "Liabilities" Turkey Iceberg, Massive Layoffs $22.4 Million in Grants Diverted to Africa: Cause of Deficits? Bay Area FY '03–'04 Housing Cuts Bay Area Prevention Counseling Cuts Dearth of Prevention Social Marketing SFAF's 25% Solution The Unkindest Cut of All: Bay Area ASO Cuts Abandoning Bay Area?

Note: The media coverage section of this report is available only on the unabridged page. Can anyone seriously believe that when an HIV/AIDS organization created to address local needs diverts fully 53% of its program services funds in a single year to Africa, that it has not simultaneously cut its services to the Bay Area in order to fund largess to Pangaea? When Pat Christen was quoted in the New York Times in November 2002 that “[SFAF has] the ability to assist in the global effort, without distracting from our effort in San Francisco” [emphasis added], she failed to elaborate on how SFAF intended to divert, at minimum, $22.4 million away from the Bay Area without detracting from services desperately needed locally.

That’s exactly what SFAF has done:  In just two years it has routed, at minimum, $22.4 million to Africa, and subsequently cut both services to its Bay Area clients — including accepting fewer clients, increasing waiting lists for services, and providing less one-on-one counseling time with its Bay Area clients — and simultaneously chopped its grantmaking support to other smaller Bay Area AIDS service organizations, hypocritically turning its back on its own Bay Area constituents.

In November 2002, the New York Times underreported that SFAF had “... diverted $1 million of its money to help establish Pangaea,” SFAF’s new affiliate non-profit global AIDS spin-off foundation.  The Times article 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 [emphasis added].”  [Note: The Times article is in the media section in the unabridged version of this report.]

Honest?  Well, not quite.

Surely Christen knew when interviewed by the Times in November 2002 that she had created two separate budgets that six months later, in June 2003, would have completed diverting the $22.4 million to Africa.  That Christen did not accurately inform the Times reporter the amount diverted was $21.4 million more than the mere $1 million reported can only be seen as outright deception, not the very ethical “honesty” she had attempted to garner for either of her two foundations.

SFAF — and in particular, Christen — has been anything but forthcoming, let alone honest, with either its donors, its clients, or the media.  Indeed, as shown in Figure 1, of the $20.5 million SFAF spent on actual “Program Services” in the period ending June 2002, its audited financial statements show that in Pangaea’s first year in operation 28.8% ($5.9 million), at minimum, of SFAF’s budget for Program Services was routed to Africa.  For the previous period ending in June 2001, SFAF had only awarded a single “global” grant of just $12,070 (that’s right, just thousands); across a single fiscal year, global grants soared from the thousands, into millions.  Notably, when SFAF released its budget in July 2001 for the period ending in June 2002 announcing that it would form Pangaea in November 2001, SFAF did not honestly forewarn its public that it intended to divert massive millions to its global “affiliate,” which funding skyrocketed in its first fiscal year of operations, diverting well over one-quarter of SFAF’s total Program Services expenses to fund Pangaea.

The right-hand slices in Figure 1 below show only “grants paid” to Pangaea during its first two fiscal years in operation, totaling $14,111,664.  It also shows that the percent mix of expenses jumped by 11.5%, from 28.8% to 40.3% ($8.2 million) — or two-fifths — of the $20.3 million SFAF spent on Program Services in the period ending June 2003.

Figure 1

Clearly, services and programs SFAF traditionally has supplied to people with HIV/AIDS in the Bay Area have been chopped.  In addition to cutting how much it spent overall on Program Services in the period ending 2003 over the previous period by $254,221, Program Services for the Bay Area was cut by $2,518,689 in order to increase the grants actually paid to Pangaea by $2,264,468, to $8.19 million!   

Even though she had told the Times in November 2002 that SFAF would not detract from its Bay Area services, just two-and-a-half months later Pat Christen babbled to the Bay Area Reporter in February 2003 that “the amount of direct services [SFAF] can provide will be reduced [in the Bay Area].”  Under Pat’s so-called “leadership,” SFAF has prioritized people in Africa as having more urgent direct-service needs than SFAF’s Bay Area clients, and when eventually forced to explain service cuts in the Bay Area, Christen dishonestly kept from telling the truth:  That the Bay Area cuts were made in order to enable SFAF to continue diverting funds to Pangaea.

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Artful Deception?: "Grants Payable" Hidden in "Liabilities"

The combined $14.1 million paid to Pangaea in the first two years of its existence shown in Figure 1 is misleading, precisely because SFAF deceptively did not include a separate category of additional “grants payables” in its summary of Program Services expenditures detailed in a chart on page 4 of the June 2003 audited financial statement.  

Taking a lesson from the Artful Dodger, in order not to frighten the horses (its Bay Area clients, its donors, and the media), rather than reporting honestly that it had actually doled out additional funds to Pangaea, SFAF chose instead to under-report the actual amount it had spent on “Program Services” by squirreling away that it was on the hook financially to pay out additional “Grants Payable” to Pangaea in both FY ’01–’02 and FY ’02–’03.  The PriceWaterhouseCoopers audited financial reports show that SFAF had placed additional Grants Payable to Pangaea under its “liabilities and net assets” figures, which are not reported as an actual “Expense” under Program Services during the same reporting period.  Indeed, while $5,698,669 in “Grants Payable” appears on page 2 of the June 2003 audited financial report, it is not until page 7 that PriceWaterhouseCoopers notes that $5,433,422 of the Grants Payable was owed to Pangaea as a “liability” using revenue or net assets from the same reporting period.  

Its curiosity roused, TheLastWatch decided to examine how “grants payable” changed the picture.  Based on data in the audited reports from PriceWaterhouseCoopers, TheLastWatch added the “Grants Payable” to the total amount of Program Services, and recalculated the proportion of grants SFAF awarded to Pangaea.  

The right-hand slices in Figure 2 illustrates a scenario of what really transpired:  Across a single fiscal year for the period ending in June 2003, between grants paid + grants payable SFAF increased the amount it paid to Pangaea by $5.4 million to $13.6 million, not the $8.2 million for the period ending in June 2003 shown in Figure 1, even as it sucked $2.5 million away from services in the Bay Area in order to do so. 

And rather than a total of $14.1 million routed to Pangaea by combining the two right-hand slices in Figure 1, combining the two right-hand slices in Figure 2 reveals that $22.4 million has been routed to Pangaea during its first two years of operation for both grants paid + grants payable in this modified view of total “Program Services.”  

Figure 2

But that is not all that a comparison of Figure 1 to Figure 2 illustrates.  Across a single fiscal year, the percent reserved for its Bay Area program services plummeted from 71.2% (Figure 1, which can be thought of as spin control by excluding grants payable) to only 47.1% (Figure 2, a more reality-based view of what transpired), a drop of fully 24%, while at the same time the percentage devoted to Pangaea skyrocketed from 28.8% to 52.9% by adding in the grants payable.  

The Big Question is why SFAF would have used this new “grants payable” trick. Why did it not simply pay the grants payable and list them as a Program Services expense in its chart on page 4 of the audited financial statement? One answer may be that because listing in its chart on page 4 that it had diverted $8.78 million to Africa during Pangaea’s first year of operations and had diverted an additional $13.6 million to Pangaea in its second year — totaling the $22.4 million — was simply too risky, even for brazen and gutsy Pat Christen, since she and SFAF have been unable to make the case to its donors and its Bay Area clients that this diversion was a wise idea. Pat babbled in the Times article about the risk being worthy, provided a case had been made for the risk, but the truth is the case wasn’t made publicly — let alone even presented completely or truthfully to its donors and clients — before SFAF leapt into the very risky business of diverting tens of millions of dollars to Africa.

SFAF possibly may have deliberately chosen to utilize grants payable tucked away under “total liabilities and net asssets” precisely in order to camouflage the massive amount of grants it was obligated to pay to Pangaea to prevent a public uproar.  Indeed, SFAF’s former auditors, Deloitte & Touche LLP, had never utilized the “grants payable” construct in any of SFAF’s audited financial reports it had issued, the last of which D&T conducted for the period ending in June 2000; and PriceWaterhouseCoopers did not list grants payable on is first audited financial report for the period ending in June 2001.  It was not until after Pangaea was created in November 2001 that PriceWaterhouseCoopers began listing grants payable for the first time in SFAF’s audited report for the period ending June 2002.

Another way of looking at Figure 2:  For the period ending in June 2003, SFAF diverted 53% of its program services funds to Pangaea and Africa.  This is hardly the 25% of fundraising proceeds Christen blabbed to the New York Times about, trying to “make a case” for the change in SFAF’s focus and a so-called “change in mandate,” by claiming that diverting 25% of its revenue to Africa would be acceptable to all of SFAF’s various Bay Area constituencies.

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Turkey Iceberg, Massive Layoffs

Just three days after the Times article, on November 21, 2002 the Bay Area Reporter weighed in on SFAF’s service cuts to people with HIV/AIDS by way of eliminating its traditional Thanksgiving dinner for its clients.  But the B.A.R. and other media outlets fell victim to SFAF’s propaganda — as have many of SFAF’s AIDS Walk, AIDS Ride, and AIDS marathon participants and the smaller Bay Area organizations held hostage by SFAF’s “beneficiary model” grantmaking, the very model SFAF battled with Palotta Teamworks over who would control the California AIDS Ride — that SFAF had a budget shortfall resulting in an insufficient number of staff to host the holiday event.  Nothing could be further from the truth: At the same time SFAF was crying poor in November 2002, it was half-way through the July ’02 – June’03 fiscal year in which its revenue from individual donors and foundations/corporations would soar by almost $3.4 million (so there had been no need to have already laid off 28 of its employees in July ’02, creating the staff shortage it later used to justify slicing turkey dinner in November ’02 from its menu of client services before it sliced an additional 20 employees from its payroll in February ’03 in its second round of layoffs in the same fiscal year).

A year before SFAF beheaded its Thanksgiving dinner for its clients in 2002 (which dinner was subsequently not restored for Thanksgiving 2003), it had already launched on November 29, 2001 its affiliate non-profit arm — the Pangaea Global AIDS Foundation, so named after a hypothetical supercontinent presumably containing Earth’s single land mass that split apart 200 million years ago.  And even as it cut Thanksgiving dinner in 2002 and 2003 to its gay and bisexual male clients, it continued to hold a Christmas luncheon only for its female clients in 2002, though that, too, may have been chopped in 2003, as information about the Christmas luncheon 2003 is not listed on SFAF’s web site. Its Christmas and Thanksgiving meals were beheaded in order to help fund the $22.4 million grants to Pangaea.

Chopping turkey dinners — and ignoring that its AIDS clients may not feel comfortable being served Thanksgiving dinners in other, possibly hostile alternate venues — is but the tip of the iceberg in SFAF’s subsequent reduction in services to the Bay Area HIV/AIDS community.  Indeed, its claim of insufficient staff, and not insufficient cash, as the reason to eliminate its Thanksgiving dinner, is hogwash, as according to its audited financial statements SFAF’s payroll for its global operations skyrocketed between June 2002 and June 2003 by almost $500,000, indicating it hired more staff for its global operations in 2003 during the same year it had fired a combined 48 people from its domestic, local operations staff.  And at every opportunity it is afforded to explain honestly cuts in services to its clients, SFAF winds up every explanation by petulantly crying poor, begging people to please give it more money by attending its various fundraisers, despite the fact that its fundraising has not been permanently or irreparably hurt by either 9/11 or a sluggish economy, as shown in figures 4 and 5 below.  [Note:  Figure 5 illustrates that individual giving post-9/11 has soared by $261,000 at the end of June 2003, well over pre-9/11 giving.]  SFAF’s repeated entreaties of “give us more money” are designed to enable it to turn around and give the money to Africa, not provide services in the Bay Area.

Lest anyone think TheLastWatch and SFAF’s clients are merely whining about turkey dinners, consider what SFAF has done to its Bay Area housing programs.  After various ASO’s (including SFAF) and other organizations have conducted costly so-called “needs assessments” across the years costing literally millions of dollars, all of which assessments have consistently identified housing as the greatest unmet need in San Francisco, SFAF has turned a blind eye to housing services in order to march over to Africa.  Disturbingly, between FY ’00–’01 and FY ’03–’04, SFAF cut $207,319 in housing subsidies and housing vouchers to Bay Area clients from its budget, and chopped a whopping $1,523,172 from its various housing programs, since FY ’00–’01, as shown in Figure 7.  (Africa, pay attention; housing or medical services that SFAF and Pangaea may start out helping you with initially could eventually be cut when next Pangaea changes its priorities, possibly heading off next to India.)

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$22.4 Million in Grants Diverted to Africa:  Cause of Deficits?

In July 2003, the Bay Area Reporter editorialized that it was time for SFAF to revamp the processes it uses to distribute revenue equitably, by distributing AIDS Walk revenue “to groups other than itself.”  In an accompanying article, the B.A.R. noted that just $370,000 of $3.1 million raised at San Francisco’s July 2003 AIDS Walk would be “spread out among some 30 other agencies.”  [Note: In recent years, it is actually 33 to 36 other agencies who are purportedly to be beneficiaries of the Walk, and indeed, SFAF spreads heavy propaganda leading up to its fundraising events that it will share the money with so many organizations in order to pump up public participation, hoping heart strings will be yanked, and more money will be raised so it can siphon the money off to Africa.]   One agency in San Francisco, Continuum, which provides adult day health care for people with AIDS possibly including physical therapy treatments, saw its 2003 “beneficiary model grant award” from SFAF’s AIDS Walk revenue plummet to $2,500, down from the $25,000 it had received from AIDS Walk 2002.

In just two years, SFAF has diverted, at minimum, $22.4 million to Africa while Bay Area residents with HIV/AIDS remain desperate for emergency direct financial assistance and housing vouchers, and while Bay Area ASO’s dependent on SFAF’s grantmaking remain desperate for funds to help their clients. As shown in Figure 3, across just two fiscal years SFAF’s audited financial statements show that it had “provided grants to Pangaea” during the respective years, in addition to having remaining “grants payable to Panagea,” totaling the $22.4 million.

In both audited statements — for July 2001–June 2002 and July 2002–June 2003 — PriceWaterhouseCoopers, SFAF’s auditors, used very precise language that the grants payable were “in addition to” grants actually awarded, indicating that SFAF was financially on the hook to pay the grants payable.   As of this writing [December 2003], SFAF is already half-way through its current fiscal year for the period ending June 2004, and no documentation will be available to determine how many more millions will be diverted this year to Africa until SFAF releases its audited financial statement for July 2003–June 2004 in December 2004.

Figure 3

In February 2003 during the midst of fiscal year ’02–’03 ending in June 2003, SFAF claimed it faced a $700,000 shortfall (“SFAF announces budget cut specifics,” Bay Area Reporter, February 6, 2003, below) and would have to cut services to its Bay Area clients, including accepting fewer clients, providing less one-on-one [counseling] time between clients and staff, increasing waiting lists for services, and cutting other “non-essential” services.  (Well, if those services had not been “essential” in the first place, what exactly were they, and why had they been previously provided?)  In addition, the article noted SFAF was laying off an additional 20 staff members, bringing the number of domestic staff SFAF had fired to 48, (fewer staff obviously means fewer clients will be seen, which is a cut in services in its own right) anticipating another $1.6 million deficit for FY ’03–’04.  Facing a combined $2.3 million purported deficit across the two fiscal years did not stop SFAF from awarding its global affiliate, Pangaea, $13.6 million in grants and grants payable in 2003 and another $8.8 million in 2002, even as it chopped services to its Bay Area clients in order to fund the largess to Pangaea.

The 20 layoffs in February 2003 were in addition to the 28 layoffs announced in June 2002 scheduled to take effect in July 2002, which SFAF blamed on a $2.5 million budget gap (“Pat takes a pay cut,” Bay Area Reporter, June 20, 2002, on the Bloated Salaries section on the SFAF main page on this web site).  It is unclear why there was a $2.5 million budget gap in June 2002 and possibly a different budget gap of $2.3 million announced in February 2003, when, in fact, total revenue had climbed by $6.4 million dollars across the two-year period (end of June 2001 to end of June 2003).  And SFAF has not explained why it claimed to have budget gaps in both 2002 and 2003 yet still awarded Pangaea $22.4 million in grants. Perhaps the grants are the very reason there have been budget gaps, but neither SFAF nor Pangaea have been forthcoming about which came first, the chicken (the $22.4 + million in grants) or the egg (the purported “budget deficits” SFAF reported in both June 2002 and February 2003).

[Note:  In addition to the grants payable to Pangaea, SFAF also had other grants payable of $776,393 ending in June 2002 and $265,247 ending in June 2003 for a total of $1,041,640 across the two years, both of which were tucked away under “liabilities.”  But neither of its two audited financial statements indicated who was to receive the extra grants payable (i.e., local/domestic vs. global ASO’s), nor how and from which accounts SFAF would pay them.  Those additional grants payable may also have contributed to the purported budget deficit causing the loss of services to the Bay Area.]

So just how did SFAF find the largess to award Pangaea tens of millions of dollars in grants it claimed it didn’t have to help Bay Area residents living with HIV/AIDS?  Well, SFAF claimed that Pfizer, Inc. — the international pharmaceutical giant known for its high-priced AIDS medications, among its other high-priced pharmaceuticals — had awarded SFAF an $11 million dollar grant to launch Pangaea in November 2001.  But disturbingly, while PriceWaterhouseCoopers noted in SFAF’s annual financial statement for the period ending in June 2002 that SFAF had “recognized $4.4 million of the Pfizer grant during the year ended June 30, 2002,” and the remainder [of the $11 million] would be “recognized as [SFAF] meets the conditions associated with the [Pfizer] grant,” there is no mention in the PriceWaterhouseCoopers audited financial statement for the period ending in June 2003 that SFAF had either a) Finally “recognized” the balance of the Pfizer grant the previous year, nor b) That SFAF had eventually received another portion of the funding from Pfizer for the period ending in June 2003, if it was, in fact, a Pfizer multiyear grant.  

In order to have a deficit, an organization needs one of two things:  Deceased revenue, or excessive spending (or a combination of the two).  As shown in Figure 4, SFAF did not have decreased revenue causing a budget deficit; indeed, across a mere two year period SFAF saw its revenue soar by $6.4 million (and its overall revenue may have climbed even higher in the current fiscal year which will end in June 2004).    

Figure 4

And while Christen was quoted in the February 6, 2003 B.A.R. that “Government deficits are very significant at the city, state, and federal levels,” in a bald attempt to deceive the public about why services at the Foundation have been cut at SFAF for the past three years, the truth of the matter is that SFAF has only seen a modest decrease in its government contracts during the same period.  While its audited financial statements show a decline of only $426,115 in “government grants” across these three fiscal years (see the Annual Audits section on the SFAF main page on this web site), Figure 5 illustrates that SFAF simultaneously had seen an increase of over $261,384 in increased fundraising from individual donors, and a staggering $6,716,492 increase in contributions from corporations and foundations, across the three audited financial statements.  SFAF does not have a revenue shortage on its hands, as it wants to mislead us.  Instead, it has experienced a $6.4 million to $7 million increase in revenue since the end of June 2001.

Figure 5

That leaves “excessive spending” as the cause of any possible deficit we are being mislead by SFAF into believing has occurred.  And the excessive spending points in only one direction:  East by South-east, to Pangaea in Africa.

Christen brazenly noted in the B.A.R. February 6, 2003 article (“SFAF announces budget cut specifics,” below) that “There is no escaping the unfortunate reality that the amount of direct services [SFAF] can provide will be reduced [emphasis added].”  The unfortunate reality, more honestly, is that direct services to Africa were increased, but could not have been without reducing direct services to the Bay Area.

And while SFAF would like to dupe the public into believing it chopped services in the Bay Area due to a loss in fundraising revenue — expecting us to ignore both the increase in individual (non-fundraising event) revenue and the increase in corporate/foundation revenue noted in Figure 5 — the truth of the matter is that across the last two fiscal years, as shown in Figure 6, SFAF has lost only $756,561 in net income from fundraising events, bringing its total increase in revenue down from $7 million to $6.4 million.  

Figure 6

In the end, SFAF’s largess to Pangaea can only be seen as part and parcel of SFAF’s decade of pandemic waste:  In the Winter 2002 issue of its publication, BETA (Bulletin of Experimental Treatments for AIDS), Pangaea noted “Unless [our] initiatives build good, solid infrastructure to sustain and manage these projects [in Africa] over the long term, we will have wasted a tremendous amount of resources [emphasis added].” From the perspective of many of SFAF’s Bay Area clients, and the smaller ASO’s hurt by SFAF’s diversion of resources to Africa, SFAF has already proved to be wasting resources Bay Area donors had contributed to SFAF in the expectation of helping resolve the Bay Area’s unmet HIV/AIDS needs.

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Bay Area FY '03–04 Housing Cuts

After various ASO’s (including SFAF) and the City and County of San Francisco have spent literally millions of dollars — including federal Ryan White CARE Act funds intended to provide actual healthcare services to people with HIV/AIDS — across the years to learn what the greatest unmet needs are for people with HIV/AIDS in San Francisco, which costly so-called “needs assessments” have consistently identified housing as the greatest unmet need, SFAF has turned a blind eye to housing services in order to establish a beachhead in Africa.  Indeed, across the four fiscal years shown in Figure 7, despite having identified housing repeatedly as the greatest unmet need of people living with HIV/AIDS in the Bay Area, SFAF has cut from its budget $207,319 in housing subsidies and housing vouchers, and a staggering $1,523,172 from its various housing programs since FY ’00–’01.

Figure 7

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Bay Area Prevention Counseling Cuts

As reported elsewhere on this web site (repeating information on the Gay Life workshops page):

SFAF reported the number of Gay Life workshop attendees on only one of its tax returns, for the period ending in 1998, reporting 204 participants.  In subsequent tax filing years, SFAF lumped together the Gay Life workshops with the Black Brothers Esteem (BBE) workshops, reporting an aggregate number, so determining attendance trends only for the Gay Life workshops is difficult to ascertain.  That said, it is troubling that SFAF’s tax returns show that the number of gay and bisexual men receiving (apparently one-to-one) prevention case management has dropped every year:  From 177 gay/bi men in 1998, to 157 (1999), 116 (2000), 105 (2001), and 101 (2002) — which is particularly troublesome since the 2000 to 2002 City of San Francisco general fund contract stated that for 2001 and 2002, 125 clients would be served with prevention case management (being short by 20 and 24 clients according to its tax returns, respectively, in those years, for an approximately 19% gap in the number of clients to be served).  

That’s right:  Contracted to have provided case management services to 125 clients, SFAF appears to have been able to locate only 101 Dalmatian's (err … 101 clients) in 2002 interested in having their gay lives case-managed by SFAF.   As well, the 2000–2002 SF DPH contract stated that 1,160 clients would be served by other non-case management components of the BBE and Gay Life programs each year, yet SFAF’s tax return for the period ending in June 2002 boasted in Statement 6 that only 649 — not 1,160 — had received these services, leaving a reasonable person to wonder whether 511 clients (44% of those projected in the contract) simply went unserved.  How can SFAF be reporting one set of data to the IRS, and possibly other data to DPH hoping to bypass the scrutiny of DPH’s contract compliance officers’, and the San Francisco Health Commissions’, radar?

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Dearth of Prevention Social Marketing

Since launching Pangaea in November 2001, SFAF has not conducted any print media prevention advertising campaigns in the Bay Area.  Just ask the Bay Area Reporter, who has been paid only to run SFAF’s Gay Life workshop registration and promotion advertisements; the B.A.R. will know that no prevention media campaigns have been conducted by SFAF since mid-2001, since the two ads to the right were last run.

In January 2001, the Institute of Medicine (IOM) issued a report titled No Time To Lose:  Getting More From HIV Prevention.  SFAF’s Public Policy Department must, surely, have read the IOM report before it launched Pangaea eleven months later in November 2001.  One of the IOM’s “research institutions” reviewers was none other than Thomas Coates, PhD, whose agency, the UCSF Center for AIDS Prevention Studies had been contracted to provide an efficacy analysis of SFAF’s “Gay Life” program, which analysis has never been released to the public, perhaps because the program may have low efficacy results.  The IOM’s report noted that social marketing advertising campaigns “show remarkable efficacy in preventing new HIV infections,” and “can be highly cost-effective because they can inexpensively reach large numbers of at-risk individuals” (page 117).  Other HIV prevention authorities have long noted that sustained and consistent social marketing media ad campaigns presenting basic prevention information are a key component in preventing additional HIV infections.

In 1998, Stephen LeBlanc noted in a Bay Area Reporter article, (“Infection, Reinfection: Can We Talk?,” Bay Area Reporter, July 23, 1998, page 27) that SFAF’s 1997 Compass Prevention [advertising] Project had:

“… vanished, replaced by the … ‘Gay Life’ program.  Each project was launched with a new media campaign, new brochures, new logos, and each spent tens of thousands of dollars on advertising.  And they all avoided any specific messages about safe-sex or HIV transmission or treatment.  Activists contend that they would be less concerned that these flagship [advertising] programs were not directly addressing safe-sex if other media campaigns were filling that gap. Unfortunately, that has not been the case.”  LeBlanc further noted “At one point we gave people basic information … Then we made a quantum shift to programs that attempt to enhance self-esteem or deal with psycho-social aspects of HIV, but I think we left the field of the basic prevention information that needs to get out there [unaddressed]” [emphasis added].

Indeed, SFAF’s FY 1999-2000 Budget noted that “[The Assumptions] multi-year risk reduction campaign [is intended] to encourage community dialogue on issues surrounding HIV disclosure and assumptions.  …  Addressing HIV disclosure assumptions is the most important impact we can have on new sero-conversions among non-injection drug using gay men in San Francisco.”  But instead of a three-year sustained media campaign, SFAF then unilaterally internally changed its “most important” mandate by cutting short the three-year media campaign in order to launch Pangaea.

SFAF’s controversial “Who Gives a Fuck” ad sparked community outrage in 2000, and the Assumptions Phase II ads designed with a gritty look-and-feel abruptly ended in early 2001, despite SFAF’s 1999 debut of the “Assumptions” claiming the prevention ads were supposed to have been a three-year (36-month) campaign.  But the Assumptions campaign died an early death, possibly curtailed to launch SFAF’s global annexation, at just about the same time it was preparing to launch Pangaea in November 2001; rather than a three-year media campaign, the Assumptions ads — albeit costing between $650,000 and, potentially, $1.4 million — were a two-year flash in the pan sacrificed from the mix of services to its Bay Area clients, new HIV infection rates in the Bay Area be damned so Pangaea could be birthed.

What has ensued — since Pangaea was formed to channel funds to Africa — is a complete dearth (as in, complete absence) whatsoever of any social marketing prevention media campaign sponsored by SFAF in San Francisco, since SFAF has ignored that Bay Area need for now well over two years beginning in mid-2001.  And callously, the cut of social marketing prevention ads may have directly contributed to purported rates of rising HIV infection in San Francisco.  How ironic is it, that the very organization trying to stem the rise in HIV cases in San Francisco has abandoned, for well over two years, any sense of ethics in utilizing social marketing prevention ads in the Bay Area, merely in order to have additional Monopoly money to divert to Africa, instead?

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SFAF’s 25% Solution

At its Summer 2001 Board of Directors meeting, SFAF’s staff — in particular, Pat Christen — promised its Board that it would not divert funds from the Bay Area in order to launch Pangaea the following November; it had further promised not to launch Pangaea unless sufficient revenues were raised independently to prevent having to rob Peter to pay Paul to launch Pangaea.  The promise was repeated in its annual Budget document for FY ’01–’02:  “While we are optimistic about the likely success of the Marathon given strong runner registration numbers to date, as a first-year event we have been very conservative in actually relying on AIDS Marathon funds to support [global] operations.” While projecting $3.7 million in revenue from the newly created AIDS Marathon (before subtracting event expenses), and although it grossed $3.8 million from the first Marathon, the California Attorney General’s report showed that only $2.28 million went to SFAF, since event overhead expenses had gobbled $1.63 million, as shown in Figure 8.

Missing from Figure 8 is how much money SFAF had raised from its newly formed LifeCycle 1 event, which was first held in the summer of 2001 after breaking away from Palotta Teamworks following the nasty legal battle over the California AIDS Ride.  Since it claims it is now producing its new Ride without the help of a third-party commercial fundraiser event producer, SFAF has neglected to file with the Attorney General’s office a statement showing overall revenue, event expenses, and how much was realized in net proceeds from its LifeCycle ride. But if we are to believe Pat Christen that just 25% of only the Marathon revenue would be used to support Pangaea, Figure 8 illustrates that even adding in 25% of net revenue from the AIDS Walk (without having told its walkers prior to the event that it might divert Walk money to Pangaea) nowhere near adds up to the $8.8 million dollars SFAF diverted to Pangaea between grants paid + grants payable shown in Figure 2 above during the same fiscal year as the fundraisers shown in Figure 8 (i.e., fiscal year July ’01–June ’02).

Figure 8

Indeed, the paltry $548,098 raised by marathoners — representing 25% of just the Marathon net proceeds — would have only reduced the $8.8 million first-year burden in grants + grants payable to Pangaea to $8.2 million for fiscal year ’01–’02.  And since Pfizer had only released $4.4 million in the first year of its three-year grant to launch Pangaea, SFAF would, therefore, have been on the hook for the $3.8 million remaining in the balance from the $8.2 million.  Most probably, SFAF made up the $3.8 million by dipping into funds raised by its bike riders and the AIDS walkers — without telling them prior to those events that was what it would eventually do.  And indeed, the list of grants SFAF awarded and attached to its IRS tax forms for the period ending in June 2002 (the most recently released tax return) — which list for years had been titled as grants made from the AIDS Walk — shows that SFAF had awarded grants of $5.9 million to Pangaea from its various fundraising events.

But the numbers don’t add up:  If the $5.9 million SFAF reported to the IRS represented only the grants paid and had not included “grants payable,” and if Pfizer had contributed only $4.4 million, that left SFAF holding the bag for the remaining $1.5 million it awarded Pangaea in grants paid, but does not explain how the additional $2.86 million in grants payable for FY ’01–’02 to Pangaea was paid.  SFAF was on the hook for between $4.2 million and $4.4 million in grants + grants payable to Pangaea, but it has offered no explanation of which fundraising sources were eventually tapped, or which Bay Area services were cut, to pay the Pangaea piper.  

SFAF cannot claim that the increased corporation/foundation revenue shown in Figure 5 could have footed this bill to Pangaea, as of the $5.1 million noted in Figure 5, Pfizer had contributed $4.4 million, leaving a modest balance of $708,872 in corporate/foundation giving in FY ’01–’02 to pay the $4.3 million owed to Pangaea.  Notably, without the Pfizer grant, SFAF would have seen a $291,000 decrease in corporate/foundation giving from the previous FY in ’00–’01, in addition to the $516,000 decrease in individual giving noted in Figure 5 for FY ’01–’02. Yet despite this fall off of $807,000 between decreased corporate/foundation and individual giving in FY ’01–’02, — and despite being on the hook to other organizations besides Pangaea for an additional $776,393 in grants payable in FY ’01–’02 — SFAF still managed to divert $4.3 million of its own funds to Pangaea, possibly by dipping into non-Marathon fundraising.

In the end, SFAF’s assertion to the New York Times that it would divert no more than 25% of its fundraising to Pangaea does not pan out.  Examining Figures 1, 2 and 8, SFAF’s diversion of tens of millions of dollars to Pangaea does not add up to 25% of fundraising event revenue, and the loss of direct services to the Bay Area has been staggering.

It has been substantially more than a mere “25% Solution.” And what now needs to follow in the Bay Area should be substantial, sustained, and quite vocal opposition to SFAF’s diversion of further resources away from unmet needs to San Francisco and our Bay Area neighbors.  Because without vocal opposition now, the diversion of funds to Pangaea will continue, and likely grow.

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The Unkindest Cut of All:  Bay Area ASO Cuts

Elsewhere in this report it has been noted that SFAF has chopped the amount of funds it shares with the smaller Bay Area AIDS service organizations, and has simultaneously slashed its domestic by firing least 48 of its employees.

Indeed, across a single FY — from ’01–’02 to ’02–’03 — SFAF has slashed its salaries budget for domestic staff providing Program Services, by $1,985,382 (even as it increased its salaries budget for Fundraising by $314,196 across two-years, FY ’00–’01 to FY ’01–’03) during Pangaea’s second year of operations in which the 48 domestic employees were fired. After all, SFAF needed that $2 million in domestic salary savings to help fund its Pangaea operations overseas.

As well, the July 24, 2003 Bay Area Reporter editorial “AIDS Walk Needs Revamping” (located on he Fundraising section of the main SFAF page on this web site) noted that only $370,000 of the AIDS Walk 2003 funds would be shared with the smaller Bay Area ASO’s, down significantly from previous years. The distribution of AIDS Walk funds shared is covered in detail on the Fundraising page, and it is probable the other Bay Area ASO’s have also had to lay off staff in the face of dwindling “grantee model” support from SFAF.

So the unkind cut of staff members across agencies who had been providing direct services to people with HIV/AIDS in the Bay Area has led directly to the unkindest cut of all: SFAF is not just forcing its own clients into longer waiting lists when not eliminating services entirely; the unkindest cuts are to those clients of other Bay Area ASO’s who are experiencing the trickle-down effect of SFAF’s cuts, when many of those clients participated in the AIDS Walks, AIDS Rides, and the AIDS Marathons hoping their agencies would receive a larger slice of the pie, and have seen the money routed to Africa, instead. (For more on the unkindest-of-cuts to the ASO’s, see the SFAF Fundraising section on this web site.

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Abandoning Bay Area?

In November 2002 — just seventeen days before the New York Times article appeared in print — SFAF merged its third non-profit affiliate, the “San Francisco AIDS Foundation HIV Prevention Project” (or HPP, a needle-exchange program) into a single non-profit with SFAF.  That merger resulted in a contribution of net assests from the HPP to SFAF of $328,696 according to its audited financial statement for the perdiod ending June 2003.

Given that 53% of its program services expenses were diverted to its other “affiilate” non-profit, Pangaea (which shares the same 995 Market Street address as SFAF), in the same fiscal year as the merger with HPP, reasonable observers wonder how long it will be before SFAF simply merges with Pangaea into a single non-profit, by claiming that its sole “mandate” will be its partnership with Pfizer, Inc. and its other partners in Africa.

Should that eventuality come to pass SFAF’s Bay Area clients, and the smaller ASO’s who have been held hostage for years by SFAF’s “grantee model” of grantmaking, can kiss SFAF’s direct services to the Bay Area goodbye.  To prevent any such eventuality, SFAF’s donors should immediately stop contributing to SFAF, if they really want to preserve services to people living with HIV/AIDS in the Bay Area.

Failure to do so will only hasten SFAF’s merger into a single global foundation with Pangaea, as it despicably and hypocritically turns its back on the Bay Area.

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Copyright (c) 2004 by Patrick Monette-Shaw.  All rights reserved.  This work may not be reposted anywhere on the Web, or reprinted in any print media, without express written permission of the author.  E-mail him at pmonette-shaw@earthlink.net.