Our response to The Chronicle of Philanthropy story about ZeroDivide

By Jon Funabiki

After a decade working to improve the news media, Renaissance Journalism finds itself as a subject of a news story. It’s about our efforts to track down and recover more than $600,000 in foundation funds that went missing. So far, it’s a story without an ending.

The news article by The Chronicle of Philanthropy, “A Foundation Collapsed. Its Money Is Gone. What Happened Is Shrouded in Mystery,” published on Sept. 12, 2019,  focuses on the collapse of ZeroDivide, a San Francisco-based nonprofit organization that worked on health and technology issues. Reporter Marc Gunther’s story asks how and why ZeroDivide, which started as a $50 million grantmaking foundation in 1998, reinvented itself into a grant-seeking nonprofit that eventually went broke in 2016.

Renaissance Journalism became a part of the story because we had been operating as a fiscally sponsored project of ZeroDivide at the time. That meant that ZeroDivide sponsored Renaissance Journalism’s grant applications to foundations, administered grant expenditures, and submitted required financial reports to donors. This arrangement is common in the nonprofit world because it enables small projects like ours to utilize the fiscal sponsor’s administrative services.

ZeroDivide invited Renaissance Journalism to become a fiscally sponsored project in 2009, and through this service we operated numerous, grant-funded projects with journalists and news organizations throughout the U.S. But in May 2016, ZeroDivide officials abruptly announced to its employees and to Renaissance Journalism that the corporation was insolvent and would close. ZeroDivide terminated its own programs and staff members, leaving them adrift. As we later reported in a complaint to the California Attorney General’s Office, ZeroDivide’s collapse had a profound impact on Renaissance Journalism:

• We lost an estimated $600,000-plus in restricted grant and contract funds that had been awarded by four foundations (Ford Foundation, The Whitman Institute, Vesper Society and Wyncote Foundation) to carry out Renaissance Journalism projects.
• We lost computer and video equipment, furniture, programmatic materials, project records and other materials that ZeroDivide held in a rented storage unit. We were informed that the storage company had liquidated the belongings because ZeroDivide had not paid its bills.
• Our staff, as well as other staff of ZeroDivide, were contacted by phone and mail over the course of several months by a debt collector who demanded we pay off ZeroDivide’s credit card debts.
• Our projects were threatened because we suddenly had no funds available to pay staff and other expenses, including the journalists, news outlets and consultants involved in our initiatives.

We immediately alerted our funders and began working with them to develop ways to restart our projects. Community Initiatives, a nonprofit created by the San Francisco Foundation to service fiscally sponsored projects, agreed to take us on as a client.

At the same time, we worked closely with our foundation supporters in an attempt to learn why ZeroDivide collapsed in such a sudden and chaotic fashion. Renaissance Journalism and our donors repeatedly requested ZeroDivide’s senior managers and board of directors to account for, and to replace, the missing funds. We got no response. Therefore, Renaissance Journalism and three of the affected foundations (Ford Foundation, The Whitman Institute and Vesper Society) filed complaints with the California Attorney General’s Office asking it to investigate ZeroDivide.

Since then, Renaissance Journalism has cooperated with the Attorney General’s Office requests for records and information. State records show that the Attorney General’s Office suspended ZeroDivide’s nonprofit status after the board failed to respond to the state’s multiple requests to file IRS financial reports and other required documents.

In May 2018—two years after the closure—ZeroDivide’s board treasurer sent a one-page memo to Renaissance Journalism stating that the board “did not engage in any day-to-day operations or accounting functions of ZeroDivide” and that they “have long been disengaged from ZeroDivide and have no ongoing dealings with or obligations to the organization.”

By policy, the Attorney General’s Office would not disclose to us what actions it was taking. However, In February 2019, we were informed by the four affected foundations that the Attorney General’s Office had advised them that ZeroDivide’s former CEO and president, who also is a board member, wanted to discuss the matter with them. Six months later, none of the foundations has been contacted.

The Chronicle of Philanthropy article is not the sort of news coverage that we would desire. We believe that ZeroDivide’s leadership needs to account for our loss of foundation funds, which caused a cascade of damage to Renaissance Journalism, its activities, staff, consultants, news partners and donors. As a nonprofit project, it took us years to recover from the $600,000 financial disaster.

Today, with much thanks to the foundations that supported us through the crisis, Renaissance Journalism is back in action and thriving, launching innovative journalism and social justice initiatives on the housing crisis and the Census 2020. We also are grateful to the many journalists, news organizations, community groups and colleagues who, through their participation, affirm the goals of our mission, which is to promote equity and social justice through good journalism.

Here is a pdf of the article:

A Foundation Collapsed. Its Money Is Gone. What Happened Is Shrouded in Mystery. – The Chronicle of Philanthropy

Follow-up coverage on this topic by Marc Gunther:

Reporting on Philanthropy In an Age of Identity Politics, Nonprofit Chronicles, September 19, 2019

Don’t apologize, don’t explain: A social justice leader evades responsibility,  Medium, October 11, 2019