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State-funded nonprofit group spent on 'questionable activities' including overseas travel, auditor finds

A poorly run nonprofit group that has received state funds to help small businesses get loans is in danger of becoming insolvent next year unless it gets more money, but the state should not provide funding without reforms, a state audit concluded Thursday.

The report by State Auditor Elaine Howle said the State Assistance Fund for Enterprise, Business and Industrial Development Corporation (SAFE‑BIDCO) has done some good helping businesses.

But it has not attempted to obtain more money from fundraising, and has imprudently spent limited funds on “questionable activities,” including 16 out-of-state trips and a trip to Ireland by its chief executives, the audit said.

In addition, the group continued to use a business development contractor even though he did not achieve his performance goals, and it continued with this contract without a competitive bidding process.

 “As a result of these issues, we are reluctant to recommend that the state appropriate funding without increased direct oversight to ensure adequate reporting and controlled expenses,” Howle wrote to Gov. Jerry Brown and the Legislature. “We believe direct oversight could occur by establishing SAFE-BIDCO as a program within the state treasurer’s office.”


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