NYC Shelter System Investigation Uncovers Excessive Pay, Nepotism, and Mismanagement

On Thursday, October 17th, New York City’s Department of Investigation (DOI) released a report exposing significant financial mismanagement within the city’s shelter system. The investigation uncovered excessive executive salaries, nepotism, and conflicts of interest, driving up costs for housing asylum seekers and the homeless.

The DOI reviewed the financial practices of 51 nonprofit shelter providers and identified numerous instances of unusually high executive compensation. The CEO of Core earned over $1 million in a single year, while the president of Acacia Network Housing received $916,000 in 2021. Another provider, CAMBA, paid its president over $700,000 annually. In comparison, Mayor Eric Adams earns $258,000 annually, highlighting the disparity between shelter executives and city officials.

“These are certainly eye-popping numbers,” said DOI Commissioner Jocelyn Strauber. She explained that while executive compensation must be “reasonable,” the lack of specific limitations leaves room for potential abuse. Strauber emphasized, “When it comes to protecting the vast taxpayer resources that City-funded nonprofits receive, prevention is key. City-funded nonprofit service providers pose unique compliance and governance risks, and comprehensive city oversight is the best way to stop corruption, fraud, and waste before it starts.”

The report also highlighted instances of nepotism and conflicts of interest, with executives hiring family members and awarding contracts to businesses connected to them, bypassing competitive bidding processes. One example cited involved SEBCO Development Inc., which hired a security company owned by the nonprofit, allowing executives to collect additional compensation.

As New York City grapples with rising homelessness and shelter costs projected to exceed $10 billion over the next three years, the DOI report recommended 32 reforms to tighten oversight and curb financial waste. 

Neha Sharma, spokesperson for the Department of Homeless Services (DHS), confirmed that DHS has already severed ties with several providers implicated in the report. “The most egregious findings in this report are related to a minority of DHS providers, and the agency has stopped doing business with several of those providers,” Sharma said.

With more than 86,000 people currently relying on the city’s shelter system, the report highlights the urgent need for reforms to ensure taxpayer dollars are used effectively to address the ongoing housing crisis.