Millions Raised by AIDS Walk Spent on Rent, Not HIV Services

By Mathew Katz on November 7, 2013 7:12am | Updated on November 8, 2013 5:15pm

 CLICK TO EXPAND: Where the AIDS Walk money and other GMHC donations go.
CLICK TO EXPAND: Where the AIDS Walk money and other GMHC donations go.
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DNAinfo/Nigel Chiwaya

CHELSEA — Of the millions of dollars raised every year through the AIDS Walk and other private donations, only a tiny fraction is spent on actually helping HIV-positive New Yorkers, DNAinfo New York has learned.

The rest pays for rent, executive salaries and administration costs for Gay Men's Health Crisis.

The oldest and largest AIDS service organization in the city expects to raise $11.4 million in donations this year — including $5.4 million from the popular AIDS Walk.

But only $374,000 of that money will go to HIV-postive and at-risk people, according to an analysis of GMHC's internal financial documents and multiple sources within the organization.

Nearly 97 percent of the small, private donations GMHC receives will go toward administrative costs, including paying the nonprofit's $389,000-per-month rent for its largely empty office on the West Side, according to documents for the 2014 fiscal year obtained by DNAinfo.

In all, GMHC plans to spend $4.6 million in donations this year on rent and other building expenses.

"When you donate to the AIDS Walk, you think that you're funding meals, mental health, job training and legal services," said one GMHC insider, who asked to remain anonymous. "In fact, your donation is used to pay rent on empty space."

In addition to rent, the $11.4 million GMHC expects to receive in donations this year will also cover $4.2 million in fundraising costs, including nearly $2 million to put on the AIDS Walk. Some of that cash goes to MZA Events, a for-profit company that helps organize the event each spring. 

Those fundraising costs include about $450,000 of AIDS Walk money that's raised by smaller AIDS organizations and then passed back to those groups after being processed by GMHC.

GMHC also expects to spend about $720,000 worth of donations on its finance department this year and $500,000 on information systems, according to documents and sources.

The CEO's office will set GMHC back another $435,000, the communications department will cost $335,000 and the COO's office will cost $293,000.

 The AIDS Walk raises millions of dollars each year for GMHC, but only a tiny portion of that money is spent on AIDS programs, sources said.
The AIDS Walk raises millions of dollars each year for GMHC, but only a tiny portion of that money is spent on AIDS programs, sources said.
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DNAinfo/Paul Lomax

By comparison, GMHC will spend just $174,000 of its donations this year on its Volunteer, Work and Wellness Center and its popular meal program; $168,000 on influencing public policy; and $32,000 on compiling reports and statistics about people living with HIV and AIDS, documents show.

The AIDS Walk website claims that money raised "will help GMHC continue to provide their life-saving programs and services to 10,000 men, women and families living with and affected by HIV/AIDS in New York City."

Krishna Stone, a spokeswoman for the GMHC, said the donations were intended mainly for infrastructure and administrative costs.

"AIDS Walk New York is the largest source of unrestricted funds for GMHC, helping to fill in the gaps in government-funded programs (like food service), to pay for some non-government funded programs (like policy work) and to support the vital infrastructure that makes it possible for GMHC to continue to fight AIDS," she said.

A large donate button on the organization's website also claims that 88 cents of every dollar donated goes directly to services and programs. The actual number is closer to 3 cents of every dollar, according to records.

"It's inappropriate and it's not right — every organization is going to have some overhead, but that overhead needs to be reasonable," said Stephanie Kalivas, an analyst with CharityWatch, a group that provides information about nonprofit accountability, when given a summary of GMHC's budget.

"You have to question why the board would approve that."

GMHC does spend millions of dollars each year on programs and advocacy for people living with HIV and AIDS: Nearly half of the nonprofit's $27 million budget this year is set to go toward programs like HIV testing, a health center and advocacy work. However, the cost of those services is almost entirely covered by a shrinking pool of government grants, government contracts and Medicaid, documents show.

In addition to government funding, GMHC also receives large donations from established groups like the Ford Foundation, which can restrict the money they give to a specific purpose, such as preventing HIV in prisons.

Individual donations, though, go into GMHC's $11.4 million "unrestricted" pool, which the organization can spend as it pleases — this year, almost entirely on rent and other administrative costs.

GMHC similarly devoted almost all of its unrestricted donations to administrative costs in the 2012 and 2013 fiscal years, sources said.

The organization has been struggling financially for the past several years, posting a six-figure deficit in 2012, records show.

Spending on AIDS service programs has plummeted as the organization lost out on some government contracts and others dried up due to the federal budget sequester, sources said. Staff saw their salaries slashed and were forced to take a furlough this year.

At the same time, two of the agency's top leadership positions are vacant: CEO Marjorie Hill was fired by the board in September and Chief Financial Officer David Fazio left the organization last month.

Chief Operating Officer Janet Weinberg has stepped in as interim CEO role since Hill's departure.

Along with Hill, Weinberg pushed heavily for the organization to move into its expensive new West 33rd Street offices in 2011, sources said.

GMHC now spends 21.1 percent of its overall annual budget on rent and building expenses — far more than other AIDS organizations in the city. Housing Works, by contrast, spends 7.7 percent of its budget on real estate costs, while Harlem United spends 6 percent of its budget on its offices, according to records.

GMHC's board is now looking to break its lease and move out of its pricey 165,000-square-foot main office, which has rows of empty desks and unused rooms, sources said.

"They need to fix the real estate issue," said Peter Staley, a prominent AIDS and gay rights activist. "It's going to bury them, cost-wise, until they get that straightened out."

Staley added that he hoped GMHC would get back to spending cash on its original mission of providing clients with basic services like meals, legal support and help navigating government bureaucracy. That might mean moving to less expensive areas of the city like northern Manhattan and the outer boroughs, where many clients live, he said.

"Quite frankly, it's a mess in there — you can see it when you visit and you can see it when they cut down on programs," said one longtime client of the organization who asked to remain anonymous.

"For someone who has done the AIDS Walk for years, it's just a disgrace."

UPDATE: Gay Men's Health Crisis released a statement Friday afternoon in response to DNAinfo's story. READ FULL STATEMENT HERE.

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