Operators of a controversial Tucson charity have taken a few steps to get right with the rules but are still engaging in practices, such as compelling homeless clients to work for them without pay, that are frowned upon by other local nonprofit leaders.
The directors of Cross County Outreach — a successor to the now-closed Giving Tree charity — have now obtained workers’ compensation insurance for their homeless clients who work at the store, following an investigation by the Industrial Commission of Arizona.
They also obtained the license required to distribute potentially hazardous donated food to the public, after a warning from the county health department last year.
And directors say they have stopped requiring clients to contribute their food stamps to communal meals at their homeless shelters.
“We’re trying to be the best we can be,” said Libby Wright, director of Cross Country Outreach. She said the organization is meeting a big need in the Tucson homeless community. “You could open 1,000 homes (homeless shelters) in Tucson and still there would not be enough,” she said.
Wright’s previous nonprofit, The Giving Tree, shut its doors in 2012. At the time, public support was collapsing following a 2009 Star investigation that found myriad violations of local and state rules, as well as of widely accepted standards for charities.
Wright stepped down in 2011, then opened Cross Country Outreach in 2013 and registered it as a tax-exempt 501(c)(3) in 2014. Like The Giving Tree, Cross Country Outreach runs on revenue from Shop 4 A Cause, a thrift shop at 5140 E. Speedway, which is for-profit, and from private donations, Wright said.
A 2016 Star investigation found the new nonprofit was violating many of the same codes and engaging in many of the same practices that got The Giving Tree into trouble. That included requiring its clients to share their food stamps, overcrowding its shelters in violation of local building and zoning codes, making homeless clients work without pay in the thrift store and failing to provide workers’ compensation insurance.
Leaders of two organizations with homeless shelters in Tucson, Gospel Rescue Mission and the Salvation Army, said they won’t refer the homeless to Cross Country Outreach’s shelters because of Wright’s history of questionable business practices.
“There’s such a desperate need for (shelters) that unfortunately some are not run with the best practices of operation,” said Pastor Roy E. Tullgren, executive director of Gospel Rescue Mission.
Tullgren said he would consider referring people to the shelters if Wright has definitely stopped forcing homeless clients to share their food stamps and is housing an appropriate number of clients in her shelters.
In 2016, four former clients told the Star that they were required to spend their food stamps on shared meals at the shelter. Jere Pedrazza, one of the charity’s co-directors, previously said clients must share $100 of their monthly food stamps with roommates at one of the charity’s shelters.
But in May, Pedrazza told the Star, “We don’t touch their food stamps.”
EMPLOYEES, NOT VOLUNTEERS
Wright purchased workers’ compensation insurance after an investigation by the Industrial Commission of Arizona determined the nonprofit’s homeless clients, who work at Wright’s for-profit thrift store, were employees rather than volunteers.
Cross Country Outreach’s directors had argued their workers are volunteers and therefore don’t need workers’ comp, said Bob Charles, public information officer for the ICA.
But the ICA determined the workers were employees because they worked in return for a place to live, he said, while volunteers work without expectation of compensation.
Homeless clients who come to Cross Country Outreach looking for a place to stay can either pay $70 a week to stay in one of the organization’s two shelters or they can work in the thrift store 4.5 hours a day, five days week, Pedrazza said.
This practice could violate the state’s minimum wage law, depending on the value of clients’ housing, said Tucson labor law attorney Don Awerkamp. For homeless clients working 22.5 hours a week for a $70 value, their pay equates to $3.11 an hour, well below minimum wage.
In May former Cross Country Outreach client Lauren Diangilo, 40, left Wright’s women’s shelter, known as Grace Home, after a four-month stay. She said that homeless clients were being taken advantage of by Wright.
The long hours clients are forced to work don’t allow much time to look for jobs or save up money for rent at a more permanent residence, she said.
“She’s preying on vulnerable people,” Diangilo said. “These people have no resources to get out.”
Beth Morrison, CEO of Our Family Services in Tucson, said it’s uncommon to charge homeless people to stay in a shelter.
“A shelter is typically an emergency place for people to get on their feet. If people are giving up their funds to stay in a shelter it’s obviously hard to accumulate funds to pay rent or look for a job,” she said.
Wright maintains that the workers are volunteers working by choice to contribute to the homes that they live in, despite the decision of the Industrial Commission.
Rachel Drew, a current client and one of the store’s supervisors, said she’d been working at the store for five years, helping customers shop and manning the cash register.
“I enjoy doing what I do,” Drew said. Clients like Drew who do extra work at the store are paid a small stipend, Pedrazza said.
FINANCES
Wright has said the new nonprofit is a scaled-down version of The Giving Tree, which brought in $1.4 million in donations and revenue in 2007. Cross Country Outreach took in $44,175 in donations and revenue in 2015, according to the Form 990 Wright provided to the Star.
The nonprofit’s 501(c)(3) tax-exempt status was automatically revoked by the Internal Revenue Service in May 2016 due to failure to file a Form 990, which tax-exempt organizations must file annually. The status was reinstated six months later, according to the IRS.
Explaining the lapse, Wright said her CPA filed for an extension that allowed them to file the 990 late. She would not provide the CPA’s contact information to the Star.
“The important thing is it’s been reinstated,” Wright said of the tax-exempt status.
ZONING CODES
In 2016 the Star reported the nonprofit’s shelters were in violation of city zoning codes. At the time, Pedrazza said 20 people were living in Grace Home and former residents had said closer to 30 people were crammed into the shelters.
The shelters are in an R-2 residential zone, so a shelter housing more than 15 people requires at least 1.5 acres, or 65,340 square feet. Grace Home’s lot is 8,289 square feet. City code inspectors told the Star last year they were prevented from entering the homes to respond to a complaint of overcrowding.
As of early May, Pedrazza said there were 11 people living in Grace Home.
Former resident Diangilo said the living conditions were not ideal, describing a “horrible bed bug” infestation.
Bed bugs are not a new complaint at the women’s shelter: The Pima County Health Department said it had received complaints about bed bugs at Grace Home in 2013, 2014 and 2015.
Wright dismissed that concern.
“They can say anything they want to say,” Wright said of former residents. She said the house is regularly inspected for bed bugs. “We’re always on it.”
NEW BOARD MEMBERS
Last year, Cross Country Outreach only had one board member, who was a co-director of the nonprofit, after two members left the board and one died.
The Arizona Corporation Commission only requires nonprofits to have one board member. But charity experts say an independent board, including members who aren’t directly involved in operations, is critical to running a reputable nonprofit.
Cross Country Outreach has since added two new board members, but the new members seem unfamiliar with the nonprofit’s operations.
Board member Natalie McGee was unaware homeless clients must pay money or work in the thrift store without pay in order to stay in the shelters.
“I don’t think it costs anything, because people don’t have anything,” McGee said. “People contribute what they can.”
Roland Cobert, who runs another Tucson nonprofit called Cross Country Ministries, said he did not know that Cross Country Outreach’s 501(c)(3) status had been temporarily revoked last year.
But he said details like that are unimportant when compared with the benefits the nonprofit provides to the community.
“Maybe these people haven’t been the most studious and doing what the government requires of them,” Cobert said. “But they are helping a lot of people.”
