This Philly nonprofit was in turmoil. Four years later, it has righted the ship.

The Philadelphia Activities Fund was supposed to be a city-run nonprofit that provided financial support for community organizations. It presented itself as such for decades, since its founding by then-Mayor Ed Rendell in 1994.

But four years ago, the fund made headlines with the discovery that it was not, in fact, a nonprofit. A 2019 Inquirer report found that the IRS had revoked PAF’s charity status in 2010 for failing to file tax returns since at least 2007 — a fact that board members weren’t aware of until told by The Inquirer.

“That was a starting point to set off some alarms that we’d better shape up, because otherwise programs are going to disappear,” said Councilman Brian O’Neill, a longtime board member and current chairman.

The board spent the last four years “righting the ship,” ultimately getting the tax-exempt status reinstated by the IRS in March 2022 — and it wants organizations to know that the fund is here and ready to lend support endeavors to better their communities.

Failing to file tax returns. Giving grants to more than just not-for-profit groups. Never getting audited. Board meetings occurring once a year or less.

For years, PAF was operating with a lack of oversight, leading to the loss of the fund’s charity tax-exempt status and the reputation of City Council members giving away hundreds of thousands of dollars to groups and people of their choosing.

“There wasn’t any oversight — everybody was just letting it up to the commissioner and the [former Department of Recreation] to do everything,” O’Neill said. “A lot of this is you have to surmise what probably happened.”

The Council member said a major issue was IRS mail being sent to an old address for the former recreation department, which funded PAF, and never making its way to the board.

But when board members finally learned the state of the fund, they took steps to clean things up. The first action item was hiring a law firm that specializes with nonprofits to help restore its tax-exempt status.

“From the time that we were retained, the board worked to improve their internal policies and procedures, which included looking at their existing bylaws that were significantly outdated,” said Evelyn McGravey, a lawyer with with Cheshire Law Group.

The board revised its purpose language to specify the range of organizations that were being supported and to limit financial support to nonprofit groups. It instated policies for conflict of interest and document retention, and for the board to meet at least every quarter. It created a website (with all of the compliance documents visible) for people to learn more about and apply for the grant.

And the fund established two important partnerships: It entered into a formal agreement with the Parks and Recreation Department, its grant administrator, and brought on the Urban Affairs Coalition to administer the application process.

“They continued to work on ways to really improve their grant-making practices and procedures and really ensure that the eligibility criteria and the funding limitations that were set forth in that original ordinance are routinely applied, and that only those types of organizations, programs and activities that the fund was intended to provide financial support for were recipients of the grant awards,” McGravey said.

The park across the street from John Kalicki’s home was becoming an alcohol-fueled nuisance.

Late-night drinking, fights, grass littered with bottles of alcohol. Powers Park in Port Richmond had gone from an underutilized park to a headache — so the neighbors decided that in order to uproot undesirable behavior, they needed to establish desired behavior.

A representative for Councilman Mark Squilla attended a neighborhood meeting about seven years ago, and let the residents know about the PAF. Neighbors were quick to apply for the grant, and received enough funding the first year to put on a movie night and Easter egg hunt in the park.

“We started bringing the community together, and people started taking a vested interest,” said Kalicki, president of the Powers Park Conservancy.

The conservancy has been receiving grants from PAF every year since it first applied seven years ago, ranging from $700 in the early days to $1,500 recently, all of which have helped the neighborhood put on concerts, gardening events, Christmas tree decorating, and more.

That’s what PAF wants community organizations to know — that they can be small and grassroots, and without official tax-exempt status, as long as they are not-for-profit and serving their community. The deadline to apply for a grant this year is May 31.

“To me, it’s a small gesture from the city,” O’Neill said. “You’re doing things that we can’t do and that we’ll never be able to fund as a city. So this is just a thank you and a recognition.”

From April 2022 to March 2023, PAF gave out more than $2.9 million to 789 organizations (there were 892 applications total). The average grant was $500 to $1,000, and the maximum award in that time frame was $7,500.

For the Powers Park Conservancy, access to the grant was a game changer for the neighborhood.

“Until you establish yourself and people realize that you’re staying here for the long haul, you won’t be able to do anything without the grant,” Kalicki said, noting that fundraising is difficult when you’re not established.

“Those grants are vital. There wouldn’t be this groundswell and this number of people interested in the park.”