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Downtown Eastside non-profits feel a chill in the aftermath of PHS implosion

April 2nd, 2014 · 7 Comments

Housing and service groups in Vancouver have been facing a tough question from the public, ever since an audit released three weeks ago showed that PHS Community Services was spending its money in all kinds of unexpected ways. That question: How do we know you are any more trustworthy?

After all, many people would think, PHS operated for 20 years without government apparently finding any problems. The wonky spending (travel to Europe, etc.) only came to light because PHS started to run deficits and provincial agencies started to ask for a closer look at the books, which then entailed a closer look at the VISA bills. By the normal measure for charities — how much is being spent on administration — PHS looked good.

So now, they’re asking, how do we know about any of you? Several people at several agencies, who said they’ve heard versions of those concerns, answered that question for me. One is looking at posting all of its audits online. Others are grappling with the issue in other ways. (And for those who don’t spend their evenings reading Twitter to keep on top of everything, the Vancouver Sun has been doing a good series looking at the financials for other non-profits in the Downtown Eastside.)

In other efforts to understand what happened at PHS, a writer I know well 🙂 looked at some of the dynamics that led to the PHS mess for The Tyee.

One note: The Bloom Group said they have a note in their annual report indicating they make their financial statements available to anyone who asks. I took that to me they could be picked up at the office. In fact, anyone interested in that information can call to ask questions and, if desired, get a copy of the financial statement mailed to them. In other words, don’t trek down to the office.



Non-profit housing and service agencies are feeling a cold wind of suspicion pass over them in the aftermath of revelations about unchecked spending by PHS Community Services.

Some say they’re getting questions from donors and the public, asking how they can be sure that non-profits are reliable. Others haven’t heard those questions yet, but expect to.

“It is going throughout the community,” said Joanne Hausch, the chairwoman of the board for Family Services of Greater Vancouver, as well as a partner at the accounting firm Deloitte. “Some members have been asked whether our agency is involved at all [in the PHS situation] and the question is, ‘Are you different?’”

Four PHS managers, including founders Mark Townsend and Liz Evans, resigned from their organization three weeks ago under pressure from the province after an audit showed that their finances were chaotic. There were all kinds of expenses that didn’t appear to fit the mandate of a group working in the Downtown Eastside.

Although a lot of spending on flowers, spa gifts and restaurants was for staff or residents, the audits also provided details of trips that managers made to Europe, New York, Disneyland and Hawaii, staying in expensive hotels and travelling by limousine.

The public, besides being shocked at some of the spending, has asked how provincial funders didn’t know about any of it until recently.

There’s been one bombshell after another reverberating throughout the non-profit community as more details from the audit have been publicized and other organizations’ finances are scrutinized by the media.

“We’re cautiously concerned about being tarred with the same brush,” said Jim Frankish, a University of B.C. professor specializing in homelessness who is on the board of 40-year-old Lookout Emergency Aid Society.

Ms. Hausch, Mr. Frankish and others are dealing with it by offering advice on how to assess the board and operations of a non-profit.

“You can take a look at a group’s board, its website, its audited financial statements. It’s important that there’s a strong board that meets regularly,” Ms. Hausch said.

At The Bloom Group Community Services Society, (former St. James Community Services Society), executive director Jonathan Oldman is talking to anyone with concerns about the controls in place for their own group’s finances.

“This is of concern for all of us,” said Mr. Oldman, whose organization serves about 1,500 people in the Lower Mainland with housing, money-management services and emergency shelters. “We’re a 50-year-old non-profit that is dependent on our reputation and our credibility.”

And at least one is considering posting all of its audits and financial statements online from now on.

“I think we’re just going to have to make everything more transparent,” said Janice Abbott, the CEO of Atira Housing Women’s Resource Society.

The most recent audit on her own organization made the headlines for a day recently, because it showed that Atira had to get an almost $1-million bailout from BC Housing to cover repair bills. The auditor also noted that Atira appeared to be financially stressed and raised questions about its long-term viability.

Family Services already posts information on its website about who is on the board and its financial statements. The Bloom Group has a tradition of publishing its annual report on its website with a note saying that anyone who wants to see the financial statements can come to the office and see them.

Mr. Frankish said that he knows it will be a topic of discussion at the next Lookout board meeting – whether their organization should make even more information publicly available.

The PHS website had never provided any of that or, in fact, any information at all – even the organization’s address. The one category that had a lot of material was the photo gallery.

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