Kermit Eady has got a beef with Eliot Spitzer, over turf, race, politics and, most importantly, the fate of the Black United Fund of New York, a charity Eady founded nearly a quarter century ago.
“Keep your hands off,” Eady, a well-known activist and not-for-profit entrepreneur, said during an impassioned speech at a Harlem church rally last week. “This fight,” he added, “we will win.”
Eady’s battle to save his embattled BUFNY may be easier said than done. The group, which collects donations through payroll deductions much like the United Way and distributes them to select community groups, has been under investigation by the Attorney General’s office all year. Spitzer named an interim board this summer to provide oversight. After only a few months, it voted to terminate Eady from his $100,000 a year presidential post, along with vice president Larry Barton, who earned $67,000 annually.
Eady’s replacement, Briding Newell, a Spitzer-tapped board member and former commissioner of Nassau County’s Drug and Alcohol Addiction department, says Eady and Barton ran the group with all the accountability of a cigar box. “Every day we find something new,” she said, “another piece of the puzzle.”
William Davis Jr., a Harlem-based architect and now chair of BUFNY’s board, said Eady had “a fundamental, profound, philosophical difference” with traditional forms of charitable oversight.
The group hadn’t submitted proper tax filings in three years, and hadn’t held proper board meetings, according to the AG’s office. (Eady, Barton and Stanley Hill, the disgraced former District Council 37 union boss, are listed as BUFNY’s only board members.)
“It wasn’t clear Mr. Eady understood at all that BUFNY was a public entity, using public dollars for a public mission,” Davis Jr. said.
Consider these numbers: Of the $1.1 million BUFNY raised in charity for fiscal year 2001, only $7,000 went out to designated grantees, according to sources familiar with the investigation.
That’s less than one percent.
“It has not been high,” Eady, 63, said about the amount given to grantees in recent years, adding that grants were simply delayed and planned to be given at later dates.
So, where did all the money go? With the full knowledge of grantees, Eady says, the group decided to spend the lion’s share of BUFNY’s donations to purchase and renovate nearly 400 units of low-income, affordable housing in a gentrifying Harlem. Already, he says, the properties are worth more than $40 million, a three-fold return on the investment. The AG’s office says donors were misled about Eady’s land development and real estate aspirations. The holdings are also registered under a number of different corporate domains; members of the interim board say they are still trying to untangle the relationship between BUFNY’s nonprofit and for-profit arms.
“There are no firewalls,” Davis Jr. said. “No paper trail,” said Newell, who fears that BUFNY’s growing debt will make it difficult to maintain its housing stock. The group is now at least 1.5 million in debt, she says, and has had trouble meeting payroll obligations.
The new board is also trying to reestablish relations with the National Black United Fund, a national charter group that cut formal ties with BUFNY about two years ago after more than a decade of frustration over accountability. “They are not part of our organization,” William Merritt, president of NBUF, said. “They shouldn’t be using our name.”
Eady, who also brokers insurance from his home, denies any suggestion that he used charity funds for private gain. Like many struggling nonprofits, he says, BUFNY may have used money from different streams to boost projects that would have netted healthy returns.
Behind Spitzer’s investigation, Eady sees a calculated move to conquer political turf for would-be governor Spitzer in Harlem. But several Harlem activists oppose Spitzer’s interim board.
“They’re outsiders,” said James Lewis, who is director of Harlem Operation Take Back and leads a weekly demonstration outside BUFNY’s offices at 2271 Adam Clayton Powell Jr. Boulevard on Tuesday mornings. “Why doesn’t Spitzer put in people from Harlem?”
Juanita Scarlett, spokesperson for Spitzer, said BUFNY’s interim board and the Charities Bureau are in the process of picking a permanent board and are entertaining applicants from across the state, including Harlem. Meanwhile, probes into BUFNY’s finances continue.