Ensuring Transparency in Ethics

Testimony given by Common Cause Illinois

First, I would like to extend my sincere thanks to Ethics Committee Chairman Alderman Martin and committee staff Jamie Cernek and Laura Reimers for their thoughtful and responsive approach to drafting this ordinance.  Common Cause Illinois appreciates their willingness to listen to and incorporate significant feedback into the final resolution.  

Substitute Ordinance 002999937 will impact the over 50,000 non-profit organizations in Chicago, vital and life-saving services to communities facing Chicago’s greatest challenges.  As such, it is critical to ensure that the ordinance not only advances transparency and accountability, but does so in a way that is efficacious, fair, and equitable.  

While we were especially gratified to see a number of improvements to the law – including exemptions for small nonprofits, grassroots and collective action organizing, young adults/youth/students, nonprofit volunteers, and task force participation – we believe there is still substantive and meaningful work to be done to ensure that the ordinance achieves its objectives without undue and unproductive burden on the community organizations.   

Outreach, Education and Technical Support: It is imperative that the City engage in robust outreach and education program to raise awareness about the ordinance’s intent and requirements in order to ensure that nonprofits are equipped to meaningfully comply starting FY2025.  The need for education and support will likely need to be extended given the size of the nonprofit sector, the complexity of the ordinance, and the high turnover rates of nonprofit employees and often constrained administrative capacity. 

Implementation and Evaluative Mechanisms: The ordinance is complex in multiple regards including scope, exemptions and qualifying terms and scenarios.  Rather than placing the onus solely on the nonprofit sector to interpret, navigate and report the ordinance requirements, the City should produce standardized guidelines for organizations to follow.  Relatedly, we recommend that the City convene a task force to assess the efficacy of the ordinance and make recommendations for improvements. 

Duty to Report: Currently, explicit standards for city employees and Council members to report potential noncompliance are non-existent, creating an opportunity for misuse and at worst, abuse.  Further, exempting city agencies and employees from disclosure or evidentiary rules may have a distortive effect.  We strongly urge the Council to remedy this inequity as soon as possible by establishing credible evidence standards. 

Grant Administration: To be awarded a City grant, there is a complex and rigorous process throughout the life-cycle of the grant that should exempt all activities associated with the grant from being categorized as lobbying activity: eligibility and application requirements, fiscal certification, program design and outcome metrics and reporting. It is questionable that the introduction of further scrutiny on top of an already meticulous and transparent process will be productive. While we are pleased that the substitute ordinance exempts some aspects of grants administration from lobbying activities, we assert that the full scope of activity – including adjustments on budget and scope – should be exempt as well (especially as such adjustments often are initiated by the City). 

Public-Private Partnership Provision 2-156-22(d)(e): The Substitute Ordinance establishes that engagement in public private partnerships (such as jointly funded City positions) and the discussion of social problems and related solutions do not require registration. We urge that this exemption be extended to nonprofit organizations that deliver city contracted/granted services.  The inclusion of philanthropic groups and the exclusion of community organizations in this regard implicitly fails to recognize the bilateral nature of governmental agencies and operating nonprofits: city agencies rely on (need/want/benefit from) operating nonprofits to have a cost-effective way to implement their policies and priorities to deliver a public good.  In addition to the mutuality of the relationship, the natural and inevitable back and forth of program planning and implementation, operating nonprofits/safety-net providers typically results in the delivery of services that are not fully-funded by Chicago governmental agencies (which is why nonprofits have to subsidize/augment their income with private funding, blended grants, etc.). For example, a grant to provide mentoring services does not fully cover staff, administrative and program costs and the nonprofit covers the budgetary gap. This, in fact, is a material benefit to the city, and we believe is no different in intent than the private-public partnerships between the city and foundations — it is just different in kind.  The in-kind contribution (consulting, subsidized services, etc.) is as materially beneficial and mutual as a subsidizing a city agency position agency that is currently exempted.  

Again, we support the improvements offered in the Substitute Ordinance that work to establish procedures to ensure transparency and ethical conduct but believe there is more work to be done to incorporate the true and bilateral nature of the dynamic relationship between City agencies and operating nonprofits more fully and urge that future adjustments to the ordinance reflect as such. We welcome the opportunity to participate in future opportunities to improve the ordinance as it now stands.