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News / Northwest

The private sector’s biggest bet in homelessness fell apart. What now?

By Greg Kim, The Seattle Times
Published: February 18, 2024, 8:51am

The plan to eliminate homelessness downtown attracted funding from the private sector like never before. The startup-like energy of the King County Regional Homelessness Authority, its charismatic CEO, and the allure of innovating a new approach to what many saw as an intractable problem excited some of the region’s richest foundations and companies.

But after a messy collapse, the philanthropic sector is learning a lesson that many public officials have learned before them — rushing to back a silver bullet in homelessness is often a fraught endeavor.

We Are In was the regional philanthropies’ largest foray into addressing street-level homelessness thus far. Created in 2020 as a private-sector counterpart to the King County Regional Homelessness Authority, it represented philanthropies, along with businesses, service providers, people with lived experience, and advocates. Big names like Gates, Ballmer, Microsoft, and Amazon poured millions of dollars into it.

Many of these organizations have funded journalism at The Seattle Times, including Project Homeless.

In the past few months, all of We Are In’s staff were either fired or furloughed after its leadership was accused of financial and organizational mismanagement. Its financial backers have either walked away or are distancing themselves until the dust settles.

These organizations, with billionaire founders, have the capacity to make a huge dent in homelessness. In other cities, they have. And some say they have a responsibility to address homelessness after contributing to its growth.

But their role as a partner in the region’s response appears tenuous while they decide what to do with the money they were spending on homelessness.

Public-private partnership

In King County, some believe that the major corporations and their billionaire founders have a responsibility to address homelessness because they have contributed to it. Former Seattle Councilmember Kshama Sawant launched a “Tax Amazon” campaign in 2020 to get large companies to pay their fair share of addressing the homelessness and housing crises.

University of Washington researcher Gregg Colburn, author of “Homelessness is a Housing Problem,” says that while blame for the region’s homelessness crisis does not rest solely on companies like Microsoft and Amazon, their growth has contributed to it. By adding thousands of high-paying jobs in the region, their workers have strained the housing supply, causing prices to rise and availability to decline, pushing low-income and vulnerable people into homelessness. He added that could have largely been prevented if the region had adequately scaled up its housing.

Up until We Are In, local philanthropies had focused mostly on youth, young adult, and family homelessness, segments of the population they have helped make considerable advances in.

In other cities, philanthropies play a larger role in addressing homelessness. Private donors in Austin have pledged $150 million to expand a single tiny home village to house thousands of people while also paying around $13 million a year to help operate it.

That kind of private investment does not yet exist in King County’s homelessness system.

But former Regional Homelessness Authority CEO Marc Dones’ innovative idea to address homelessness in downtown Seattle succeeded in drawing philanthropies’ interest.

Andi Smith, executive director of the Washington team at the Ballmer Group, said these are exactly the opportunities that philanthropies look for in homelessness, projects that government partners present to them in pioneering new approaches that are potentially more effective.

“We can try things and we can try to understand what works and what doesn’t and what’s next,” Smith said.

Ballmer Group, along with the Gates Foundation, Amazon, Microsoft and other groups, pledged $10 million for this effort.

We Are In was also tasked with shaping the public narrative around homelessness, collecting data about what was working, and advocating for policy solutions.

Excitement and expectations were high, creating a rush to get the project off the ground.

We Are In advisory board co-chair Derrick Belgarde said the organization decided to take an administrative shortcut. Instead of incorporating as a 501(c)(3) tax-exempt nonprofit, We Are In took on a fiscal sponsor that would manage its finances, staffing and HR functions. Belgarde said that shaved off more than a year in the time it could take for the money to start paying the bills for the downtown project.

But the shortcut would create complications in assigning blame when things fell apart.

Partnership for Zero was slow to get off the ground and show results. Then, Dones, its chief architect, resigned in May 2023. By September, the authority shut down the project.

Funding and supporting that project had become the main role of We Are In. With its collapse, it became unclear what its function would be, and by extension, it became unclear how involved the major philanthropies would be with the regional homelessness response.

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A messy collapse

Behind the scenes, We Are In was falling apart.

Staff were raising concerns about the organization’s leadership. In a letter that was later sent to the board, they accused executive director Felicia Salcedo and managing director of external affairs Erik Houser of discrimination, racism and creating a hostile work environment. Salcedo was also accused of financial misconduct and negligence.

Because of the way the organization was structured at its creation, those complaints went to its fiscal sponsor, an organization called Building Changes, which began an investigation into Salcedo and Houser.

Partly due to that investigation, Building Changes told We Are In’s advisory board that it would cease being the organization’s fiscal sponsor once their contract expired at the end of the year.

We Are In scrambled to find a new fiscal sponsor and began to transfer operations to Panorama Global. Then, Building Changes fired Salcedo and Houser on Dec. 13.

Salcedo did not respond to a request for comment. Houser denied all claims against him and said that he was not told the reasons for his firing or the scope or outcome of the investigation.

Belgarde said board members were in the dark because Building Changes handled employment and HR issues.

But at that point, the philanthropies and corporations financially backing We Are In indicated to Belgarde they still intended to support it going forward. So the day Salcedo and Houser were fired, he wrote in an email to the three remaining staff that “we want to assure you that your jobs are secure.”

Then on Jan. 11, We Are In’s new fiscal sponsor, Panorama Global, furloughed the remaining three staff, again catching board members by surprise. Belgarde said Panorama told the board We Are In didn’t have enough money to pay employees.

Building Changes executive director Daniel Zavala said they sent Panorama Global an initial $500,000 to begin the transfer of the fiscal sponsorship, but We Are In had overspent its operating funding, the account that pays employee salaries.

Similar finger-pointing occurred after the collapse of a hotel shelter program last year. Building Changes served as fiscal sponsor for another organization, the Lived Experience Coalition, in that case and also said it overspent funds.

Zavala said there is another half million that Building Changes is waiting to send after it pays the balance on existing commitments. Some of those are to the King County Regional Homelessness Authority to wind down its Partnership For Zero project.

We Are In’s philanthropy and corporate funders have distanced themselves from the mess and resigned from the board. Microsoft, Gates Foundation, Ballmer Group, Raikes Foundation, Amazon, and Campion Foundation — who collectively provided millions to We Are In over the last few years — say they have not decided if they’re funding the organization going forward.

At a crossroads

Smith with the Ballmer Group said the philanthropic sector is at a crossroads in terms of where to go next on homelessness funding.

“This all just unfolded,” Smith said. “And so we are in the process of figuring out what is to be taken from the messiness to inform our next level of strategy.”

She said Ballmer Group and other funders didn’t know about issues at We Are In until the end of 2023. Regardless of what happens there, she said they are not walking away from homelessness or the ideas behind the Regional Homelessness Authority and We Are In.

“It hits the idea that there is not a magic bullet for these issues,” Smith said. “This is long-term work. As we engage and try different things with philanthropic capital, some things will work and some things will work less well. And we need to stay at the table.”

As plans are made, she said Ballmer could consider funding the Regional Homelessness Authority’s general operating budget.

The city of Seattle and King County say that partnerships with the philanthropic and private sector are necessary to address homelessness and that they expect these partnerships to continue regardless of what is happening with We Are In.

“Any one organization facing challenges does not imperil the broader work,” wrote Chase Gallagher, spokesperson for King County Executive Dow Constantine.

“The current circumstances give us an opportunity as partners to pause, look at how things are going, and roll up our sleeves to continue the work,” wrote Jamie Housen, a spokesperson for Mayor Bruce Harrell.

The Regional Homelessness Authority said it’s important to keep in context where the responsibility and ability to address homelessness truly lies.

“Public-private partnerships are an essential part of a community effort to solve homelessness, but private funding will never replace public funding. To solve problems at scale, public funding is required,” said Anne Martens, spokesperson for the authority.

For Belgarde, We Are In could have been set up to succeed. Had the organization waited to incorporate as a tax-exempt nonprofit, board members could have had greater oversight of the organization’s leadership and financial management and avoided conflict with its fiscal sponsor.

“If I could go back in time, I would have slowed down the ramp-up,” Belgarde said.