CHICAGO — Providing fodder for critics of Chicago’s heavy use of tax-increment financing, the city inspector general released a stinging report Tuesday that found a charity founded by former Mayor Richard Daley’s wife received nearly $1 million in contributions from businesses as part of their TIF subsidy agreements.

The disclosure came in inspector general Joe Ferguson’s review of TIF public benefits clauses and charitable donations. A portion of TIF subsidies is sometimes donated to public and private charitable organizations under redevelopment agreements through a public benefits clause.

The report cited 73 redevelopment pacts that included such a clause from 1985 through 2009. A total of 27 directed cash contributions to private nonprofits, with most occurring between 2000 and 2009. After the city itself, the after-school program led by Maggie Daley known as After School Matters or an affiliate was the top recipient of donations. It was named as a recipient of 59% of the agreements that directed contributions to private nonprofit organizations, receiving a total of $915,000.

After a review of the documents and interviews with business recipients, Ferguson found that the Daley administration “unilaterally” chose the organizations to receive contributions. In interviews with city employees, Ferguson’s office found most could not clearly spell out how the city decided where to direct the donations.

“The IGO did not review and thus does not raise any question about the value of work done by After School Matters. With that said, the lack of transparency and accountability in the public benefits process raises an appearance of preferential treatment for selected private nonprofits,” the report reads.

“This is a specific example of the lack of transparency, accountability, and ownership the Mayor’s Task Force on TIF Reform discussed earlier this summer,” Ferguson said in statement.

Some investment banks and law firms that do work on the city’s bond issues have long provided financial support for After School Matters and attend the annual gala fundraiser. Publicly, they defend the support as a means to show they are good corporate citizens, and few would contest the benefits provided by the popular program. Privately, market participants acknowledge their support provided a means to curry favor — or avoid disfavor — with the former mayor.

Current Mayor Rahm Emanuel praised the organization at its recent 20th anniversary celebration. The organization has received millions in city support through grants.

Daley long favored TIF as a development tool in both the downtown area and in neighborhoods. Supporters point out its successes, especially in the thriving downtown area. Critics argue it has failed in other regions, is ripe for corruption, and diverts property tax funds from other taxing bodies such as the schools that otherwise would receive  the growth in revenues set aside for redevelopment.

Emanuel’s task force on TIF reform concluded that the city should continue using TIF but reform it.

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