ALLIES FOR COMMUNITY BUSINESS, INCNon-Profit

Criteria: The Organization was to distribute funds to eligible businesses as approved by the grantor in a single occurrence. As such, an eligible business was to be awarded only one time. Condition: The Organization overfunded eligible businesses during 2020. For the Illinois Department of Commerce and Economic Opportunity awards, the Organization overfunded a total of $2,220,000 to 71 businesses during 2020. As of December 31, 2020, $1,630,000 of the amounts overfunded had been recovered, leaving $590,000 overfunded to 35 businesses as of December 31, 2020. Context and Perspective: There was a high demand and immediate need from businesses for financial assistance due to the COVID-19 pandemic. As a result, a large volume of applications was received at a fast pace throughout the grant period. The focus was to quickly disburse as many grants as possible to eligible businesses so the needs of the businesses could be met immediately for the business?s survival. The Organization identified 73 overfunding events occurring in 2020 totaling $2,220,000 out of 5,965 total funding events approximating $204,000,000. We had tested 67 disbursements and did not identify any additional duplicated payments. We did not use a statistically determined sample. Questioned Costs: The questioned costs of $590,000 associated with this finding for the Illinois Department of Commerce and Economic Opportunity awards, is the amount overfunded that was unable to be recovered as of December 31, 2020. Subsequent to December 31, 2020, the Organization has recovered more of the overfunded amounts, leaving a balance of $290,000, as of April 30, 2021. Effect: The errors made by overfunding eligible businesses could impact future funds received and disbursed to other businesses from the grants. In addition, a contingent liability could be owed on the federal funds not collected back from the businesses that were overfunded. Cause: The overfundings occurred for multiple reasons as follows: 1. ACH errors made by the recipient when applying for the funds and the bank holding the ACH transaction for unknown reasons, resulting in timing discrepancies. 2. Businesses were approved for funding prior to obtaining a completed W-9. Once W-9 was received, the business was considered a new eligible applicant in the system used to monitor the program, and some of those businesses were erroneously approved for additional funding. 3. Applicants applied multiple times with different EIN numbers or other acceptable identifying numbers. Identification as a Repeat Finding: This was a new program in 2020, and as such, not a repeat finding from prior audits. Recommendations: We recommend the Organization continue to track returned funds that were overfunded. In addition, the Organization should implement systems and controls to carefully track individual business that have been approved and disbursed funds to ensure a business is not approved or disbursed duplicate funds. Views of Responsible Officials: Allies for Community Business (A4CB - formerly ACCION/Chicago) partnered with the State of Illinois, City of Chicago, Will County, and several other governmental and philanthropic organizations in 2020 to distribute over $360,000,000 in emergency grants to over 20,000 businesses at very high speed in the midst of a devastating pandemic. A4CB is proud to report that we have executed these programs with over 99% precision, even under these once-in-a-century circumstances. For the fraction of a percent of the grant applications we funded in error, we are in the process of correcting for every penny with which we have been entrusted by our partners and will complete that work in 2021. We continue to tighten our processes even further to eliminate the few errors we have observed as we apply what we have learned from our 2020 performance towards grant-making in 2021 and beyond. Specifically, in January of 2021, A4CB implemented a new loan and grant platform, LoanWell, which automatically ensures that a grant application can only be funded once through the use of a unique Funding Status field. The new system controls for all edge cases that created complexity in 2020, including when a receiving bank fails to correctly post funds to the account of a grant recipient in a timely manner, when an applicant submits multiple applications under different employer identification numbers, when an applicant returns awarded funds and subsequently reapplies, when an applicant submits supplementary documentation for which our reviewers must reconfirm eligibility, and many other cases. A4CB implemented this new platform in January to proactively implement improvements based on our experiences in 2020, before our audit began in earnest. Since January, we have continued to enhance our system and will leverage this technology to partner with the State of Illinois to provide another ~$250 million in grants beginning in July of 2021, the planning for which is ongoing as of the date of this audit report.

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