SIF and the Office of Inspector General: Time to Chill

Before we jump the gun once again, perhaps it would be a good idea to understand what the OIG does first.

The Nonprofit Quarterly, which stirred up unjustified hysteria about the supposed lack of “transparency” in the Social Innovation Fund’s selection of intermediary grantmakers (see my previous posts here and here), is now reporting that the OIG at the Corporation for National & Community Service (CNCS) is conducting an “investigation” of the selection process.  NPQ claims that their previous stories “resulted in the publishing of some core [SIF] documents.”  As to “the results of the investigation,” NPQ now piously expresses the “hope they will also be published.”

Informed readers will recall that NPQ made lurid claims about potential “conflicts of interest” without even acknowledging that the responsible official made complete written disclosures about his prior connections with SIF applicants and that he recused himself completely from any and all considerations of their applications.  Nor did NPQ report that CNCS indicated beforehand that it intended to publicly post selection process documents as soon as it had time to do so shortly after completing a long and labor-intensive review period.

Now NPQ is characterizing OIG’s review as an “investigation” and calling for the results to be made public.  Once again, it appears that NPQ doesn’t understand how this process works:  what OIG is doing probably isn’t an investigation in the sense that NPQ is implying, and all OIG reviews are required by law to be made public.  Remember that when NPQ claims credit later on.

As someone who practiced federal and state constitutional and administrative law for more than 20 years, let me offer some perspective on this latest development.  My take isn’t as exciting as NPQ’s, but it is better informed.

By law, some 73 federal (and most state) agencies have an OIG.  As explained in the Inspector General Act of 1978, the purpose of an OIG is “to create independent and objective units ... to conduct and supervise audits and investigations relating to the programs and operations” of those agencies.  Right away, you can see that the OIG has two separate and quite different functions:  “audits” and “investigations.”  This is confirmed by Section 3(d), which states that: 

Each Inspector General shall, in accordance with applicable laws and regulations governing the civil service—

(1) appoint an Assistant Inspector General for Auditing who shall have the responsibility for supervising the performance of auditing activities relating to programs and operations of the establishment, and

(2) appoint an Assistant Inspector General for Investigations who shall have the responsibility for supervising the performance of investigative activities relating to such programs and operations.

So OIG’s divide their activities between “auditing activities” and “investigative activities.”  The distinction is extremely important:  an investigation is an adversarial proceeding looking into possible violations of law or contractual obligations, while an audit is a non-adversarial process to improve program management and efficiency.  Which one is this?  I can’t say for sure, but the email I received from Paul L. Carttar, SIF Director (yes, the same dodgy character whom NPQ smeared before), makes it look like an audit:

Dear Expert Reviewer,  

To ensure that we are building the most effective selection process possible, we have asked the Corporation for National and Community Service’s Office of the Inspector General (OIG) to evaluate the fairness and consistency of the grant review procedures that we used earlier this year to award the inaugural set of grants from the Social Innovation Fund.

If this were an investigation, SIF might not even know about it, and it certainly wouldn’t be allowed to go around telling everyone about it.  Given that (1) CNCS asked the OIG to conduct the review for the purpose of (2) ensuring the effectiveness of the selection process, this sure doesn’t look like CNCS might be in the kind of trouble that NPQ is implying.

Federal and state agencies created OIGs because they wanted government agencies to have independent audit and investigation expertise.  Government programs like SIF are complex and expensive, and it takes particular skills and dedicated resources to make sure they’re being run with integrity and efficiency.  By asking OIG to review the SIF selection process, CNCS is taking advantage of resources provided by federal law for the purpose of helping the Corporation do its job as effectively as possible.

NPQ (and others) caused a lot of precipitous and unnecessary anxiety last time around because they didn’t bother to read, much less understand, publicly available information about the relevant transparency requirements that governed CNCS’s work or the procedures that SIF had followed.  Rather than jump to unjustified conclusions again, let’s consider the possibility, strange as it might seem, that this might be yet another case where a responsible government agency is trying to do the right thing in the way that it manages taxpayer money.