Taken for granted: Aldermen influence which nonprofits get government grants. Some say it's money they can't afford to lose.

Ledall Edwards doesn't want to jump to the conclusion that a statue of A. Phillip Randolph--the civil rights leader who organized Pullman train porters--cost his Roseland Business Development Council some $27,000 in federal anti-poverty funds. But, in retrospect, he realizes that his support of the statue may have not only cost him a city contract but standing with an alderman and a voice in the neighborhood's development.

In the 9th Ward, which includes most of the North Pullman and Roseland neighborhoods on the city's South Side, the statue has become a divisive political issue. It was installed in 1997 on a city-owned vacant lot adjacent to a museum honoring Randolph. But 9th Ward Alderman Anthony Beale wants the statue relocated so that developers can bid on the vacant lot. Security guards, police, backhoe and crane operators were all used in an unsuccessful attempt to move it.

Less than a month after voicing support for leaving the statue alone, Edwards got a letter from the city notifying him that his agency would not receive Community Development Block Grant money, a federal program known as CDBG. Funding was also pulled for two other Roseland business development groups supporting the statue.

Each year tens of millions of dollars in block grant money flow from the U.S. Department of Housing and Urban Development to City Hall where they are then dispersed to neighborhoods throughout Chicago. For example, the city estimates that it will spend $125 million in block grant money this year--with $103 million coming from the federal government and the rest from loan repayments, land sales and unspent block grant funds from prior years. The Roseland Business Development Council had received block grant contracts to advise small neighborhood businesses nearly every year since 1980.

"Now we're being cut out of the process," said Edwards, the group's director. "We kind of felt it was more political. I think the alderman played a large part in the process."

Alderman Beale's office said politics played no part. "The reason the money was dropped was because of a performance issue. [Edwards] did not go out and get the jobs and bring the businesses into the community," said Rich Ringer, a spokesman for Beale.

Yet an April 2004 evaluation by the Department of Planning scored the Roseland Business Development Council at 89 percent in achieving the targets of its CDBG contract. The evaluation tracks how well agencies document their progress on the work plan laid out in their city contract. Edwards said the quarterly evaluation is the only document the city sends him to assess his performance.

The dispute underscores a debate over the CDBG funding process, which advocates say is responsive to neighborhood needs and critics say is fraught with ward politics.

"Are politics involved? Absolutely," said Jacqueline Leavy, director of the Neighborhood Capital Budget Group, a city budget watchdog group. "The aldermen have to sign off on CDBG contracts. This is not in federal law, it's not in ordinance, but it's the way it's done."

"This is how Mayor [Richard M.] Daley keeps the city council happy. He lets them have a greater voice in [tax increment financing] districts and city contracts," she added.

While several aldermen said they are advised on which groups should receive block grant money and how much, some said that those conversations are just a part of the legislative process. Besides, others argue, the aldermen are best-equipped to make those choices.

Under prior CDBG contracts, Edwards linked Roseland-area businesses with the city's facade-rebate programs and, perhaps most importantly, kept them plugged into City Hall dialogues about neighborhood development.

In November 2004, as he had in previous years, Edwards received a letter from the city's planning department stating that the Roseland Council's proposal had been "preliminarily recommended" for funding, but warned that all funding was subject to City Council approval.

Later that month, Edwards attended a community meeting in support of leaving the Randolph statue alone. Also attending were the heads of the Chicago Roseland Development Corporation and the Greater Roseland Community Development Corporation.

But, in his next communication with the city, Edwards learned that things had changed. This time the letter came from the city's Office of Budget and Management. "This year, we received over 600 applications for a very limited number of grant awards. Unfortunately, your agency was not recommended for funding," read the Dec. 15, 2004, letter from Jarese Wilson, managing deputy director for budget and management. "The decision to not recommend your agency for funding was extremely difficult. This year's competition was filled with many good applications and the competition was high."

Also dated Dec. 15, 2004, city budget documents indicating "corrections and revisions" for the planning department showed that block grant money for the three Roseland agencies--more than $90,000 in all--had been eliminated. Of the 52 business development groups listed, the Roseland agencies were the only ones to have their funding cut in any way.

"You would think people in City Hall would need to know resources need to be sent here," said Edwards.

The city certifies that 70 percent of all block grant money will be used in areas where a majority of the residents are low- or moderate-income. In Chicago, CDBG money has paid for an array of innovative programs including a one-of-a-kind 911 response team in public housing and family violence prevention for immigrants.

But the money also plays a large role in bulking the payroll of many city departments. Of the $125 million in this year's CDBG budget, more than $94 million will remain in City Hall. About $44 million pays for 564 positions in several city departments from planning to housing--and services delivered by those departments like employment, neighborhood planning and housing programs. Just $31 million goes directly to nonprofit agencies.

Lisa Schrader, spokeswoman for budget and management, did not respond to repeated requests for comment.

In 1972, President Richard Nixon ushered in the CDBG program as part of his "New Federalism" reforms that gave states and cities more control over how to use their federal funds. Nixon's goal was to send development funds to states and cities, with few of the program requirements that marked earlier federal aid programs.

But the future of the program may be in jeopardy. In February, President George W. Bush's budget proposal called for cutting the block grant funds in half. The proposal, which was voted down by both houses of Congress, was met with an uproar by city mayors. Mayor Daley referred to the potential loss of CDBG funds as a "life or death issue" for Chicago.

Several nonprofit program directors interviewed by The Chicago Reporter said the quality of their proposals was the top factor in deciding whether they would get funded. Yet, when asked about the role aldermen play in the CDBG process, their answers varied. Some were hesitant to respond, while others explicitly described the effect their alderman had on them receiving funding.

Aldermen have the power to alter an agency's funding, even though block grant funds are allocated through a proposal process, said Ivan Medina, a professor of social work at Loyola University Chicago, who has spent 25 years working for nonprofits such as Gads Hill Center and Association House.

The process begins in May when would-be delegate agencies submit their proposals to various city departments. Over the summer, proposals are vetted for soundness and how well the agencies can serve low-and moderate-income households. By October, aldermen receive lists of agencies in their wards or serving clients in their wards from the Office of Budget and Management. Negotiations between aldermen, city departments and the Office of Budget and Management--over which agencies should receive more funding, less funding or no funding at all--continue until the City Council passes the budget at the end of November.

"It's a little bit of a political process and it works both ways," said Medina. "Certainly [the aldermen] don't want to piss off an organization that is in their ward and might give them some bad press."

But in practice that doesn't mean aldermen will slash agency funding on the floor of city council, even if they have the power to do so, said Medina. "I don't see a lot of aldermen completely cutting their agency off. What I have seen is an alderman lowering one grant in order to give somebody else a little bit more money."

Kenny Ruiz, who directs street intervention programs for the YMCA in Humboldt Park, Pilsen and Little Village, said, "You want to inform [aldermen] of what you're doing. So they don't look foolish."

When asked how important aldermen were in the CDBG funding process, Ruiz said, "Relationships are very key."

"That's the unspoken ground rule," said Leavy. "Everyone knows. Everyone understands. You can't have a viable application for [CDBG money] unless you have a working relationship with the alderman."

But the head of one of the city's largest nonprofit contractors disagrees. "It's not as political as people are saying," said Steven McCullough, president of Bethel New Life.

Bethel New Life received about $2.7 million in city contracts in 2004, nearly 20 percent of its $14.5 million budget, but less than $60,000 of it came from the block grant program, records show. McCullough said the contracts helped provide several services in the Austin and West Garfield Park neighborhoods, like cultural arts programs, home-buyer counseling, low-income housing and bringing residents to CAPS meetings.

McCullough stressed that the quality of an agency's application and its track record are the top two factors in getting block grant money. He said a group's relationship with their alderman is third.

He said his group works closely with 28th Ward Alderman Ed Smith and 37th Ward Alderman Emma Mitts, but that didn't keep Bethel New Life from publicly disagreeing with Mitts over a new Wal-Mart in the Austin neighborhood. "Alderman Mitts, who is a really good woman and who I have absolute admiration for, was a huge proponent of bringing Wal-Mart to the 37th Ward," said McCullough. "We took the position that those jobs didn't increase quality of life. They would do more harm than good."

That's a battle McCullough lost, though he says it won't keep his organization and the alderman from working with one another. "I don't think it jeopardized our relationship. I don't think Alderman Mitts was playing that game."

Mitts said she appreciates Bethel New Life's work, but she has had sit-down meetings with McCullough to ask that the organization create more projects within her ward.

She griped that several other agencies in her ward seeking CDBG money have left her out of the loop, only approaching her for a letter of support after they had already submitted their proposal to the city. "I had a problem with that process," said Mitts. "Well, if I haven't saw what you submitted, now what am I supporting?"

But Patrick Salmon, president of the Back of the Yards Neighborhood Council, says that nonprofits overestimate what letters of support, from aldermen or other politicians, can do for them. "[The letter] might speak to your credibility but it's not going to get you in the door to funding," said Salmon, who added that nonprofits aren't usually required to provide letters of support.

Salmon knows the process well. He is head of the Community Development Advisory Council, known as CDAC, which also has a say in block grant contracts. Its 45 members are made up mostly of nonprofit executives.

He stressed that the CDAC is an advisory council only; city departments aren't bound to their recommendations.

What typically happens, Salmon explained, is that over the summer CDAC reviews nonprofit applications that have already been recommended by various city departments. For the most part, Salmon said the advisory council concurs with the departments.

The advisory council often steps in to advocate for agencies whose' funding status is uncertain. They provide insider details that may explain an agency's recent lackluster performance, like changes in management, board of directors or locations. While the advisory council can also recommend that an agency be cut for funding, Salmon said that rarely happens.

Currently city departments are charged with the task of verifying that agencies applying for funding are legitimate nonprofits. Salmon cautioned that many groups who submit proposals are in no way prepared to fulfill them. "When you narrow it down, there are an unbelievable number of organizations that have no more chance of being funded than the man in the moon," he said.

Salmon added that CDAC used to visit each new nonprofit, and sometimes the groups weren't legitimate. "We'd knock on the door, [and] here would be some big, fat, old lady with a frying pan and a night gown on and she's the director of this so-called nonprofit organization," he said.

When the CDBG program was founded more than 30 years ago, its aim was to return the decision-making process over federal development funds to local leaders. In Chicago, that's been interpreted as making aldermen the arbiters of what community agencies are pulling their weight.

Each alderman gets a list of funding recommendations from the Office of Budget and Management in the fall. 35th Ward Alderman Rey Colon said he's asked by that office to weigh in on groups that provide services to his constituents. "They ask us whether these organizations are performing or not performing," said Colon.

Citing the 2005 budget year, Colon said block grant funding was stripped for the Armitage Chamber of Commerce. The group had changed its service area and "received many complaints," Colon said.

"Sometimes you can advocate for organizations that didn't make the cut. And you often have info about the effectiveness of organizations that the folks downtown don't have," said 4th Ward Alderman Toni Preckwinkle.

22nd Ward Alderman Ricardo Munoz was more sanguine about the back-and-forth between aldermen, nonprofits and the city budget. "That, my friend, is the legislative process," said Munoz.

Complicating matters further is the fact that an agency's service boundaries often extend over multiple wards. Agencies that offer workforce development, economic development, domestic violence prevention, or home-ownership counseling, might draw clients from many parts of the city. As a result, those groups might list several wards on their CDBG application--and several aldermen could have a say about the organization's performance and funding. "We bump heads," said Mitts.

She pointed to one example where she was asked to fund an organization that she'd never heard of. "They say they service my ward. I've been tempted, the last two years, to not fund them because I don't know them," she said.

Ongoing scandals have tainted the city's contracting program. In 2004, the Chicago Sun-Times reported that the city paid over $40 million to dump truck operators that did little to no work. During the past year, the city has had to vet its certification process for minority-owned and women-owned firms due to the number of city contracts intended for those firms that were instead going to white-owned fronts.

But those familiar with the city's contracting to nonprofits claim there isn't enough money in it for a big-time scandal. "The big bucks in contracting are not to nonprofits but to huge public works contractors," said Leavy of the Neighborhood Capital Budget Group.

Few, if any, nonprofits have grown fat off city contracts. The city does not front money for nonprofits. The groups spend their own money to provide services and get reimbursed by the city on a monthly or quarterly basis. The majority of city contracts fund the delivery of services, not general operating costs for staff time and office rent. For instance, Bethel New Life regularly dips into its operating budget to fulfill its CDBG contracts with the city, said McCullough, the agency's president. "For the most part, the city tries to fund activity."

Before being elected alderman, Colon had directed the Humboldt Park branches of both the YMCA and The Boys and Girls Club. When seeking city funding for these organizations, he "would have never gone to the alderman," Colon said. Aided by their track record and name recognition, he lobbied for them through city departments.

Rosa Perea, executive director of the Juan Diego Community Center in South Chicago, also doesn't go to her alderman. She doesn't receive CDBG money but negotiates her agency's $149,000 HIV Prevention contract directly with the city's health department.

She said she feels 10th Ward Alderman John Pope acknowledges the work of the center but never supports their work because many of its clients are undocumented immigrants. "He knows that those people don't vote," Perea said. "So we don't even make the effort to go and ask if he can help us. ... We can get it on our own. We've established a good reputation with the city."

Pope did not return repeated requests for comment. Perea knows the Mexican immigrant community she serves is in dire need of the anonymous HIV testing and counseling. Still, she believes that accepting city money keeps her from getting the community organizing grants she truly desires. "The reason is that organizations that give money to organize--they don't believe that it's possible you can organize and do services," said Perea. "You can do one or the other but not both together."

Frank Life and Sean Redmond helped research this article.