Mayor London Breed said Tuesday she was “appalled” by reports of mismanagement surrounding her key social equity program, the Dream Keeper Initiative, and acknowledged she should have done more to copyright the integrity of the effort.

“As Mayor, I take full responsibility because the buck stops with me,” Breed said in a statement. “Any potential misuse of taxpayer funds is unacceptable.”

Breed was responding to news reports Thursday that raised questions about spending by then-San Francisco Human Rights Commission Executive Director Sheryl Davis. A Chronicle investigation showed that the department appeared to have flouted city purchasing rules, and revealed that Davis was facing a whistleblower complaint for allegedly asking a nonprofit to make purchases on behalf of her agency, including a $10,000 house rental on Martha’s Vineyard.

It was also revealed Thursday that Davis had a close personal relationship with a nonprofit executive whose organization was one of the largest recipients of Dream Keeper funding, as the San Francisco Standard first reported. Davis signed off on contracts with James Spingola of Collective Impact, awarding up to $1.5 million in Dream Keeper funds from her department to his nonprofit.

Davis took a leave of absence Thursday, shortly after the Chronicle published its investigation, and resigned Friday at the mayor’s request.

In her statement, Breed said she was aware Davis and Spingola were “very close friends.”

“That’s why I made it clear to former Director Davis on multiple occasions that she needed to wall herself off from all decisions related to Collective Impact,” Breed said. “While protective measures were put in place, they weren’t implemented soon enough or to the extent necessary.”

Davis penned a letter removing herself from contracting decisions involving Collective Impact in late 2022, but that was after she signed the contracts with Spingola. She noted in the letter that she previously led Collective Impact, before her appointment as department head in 2016, and wanted to avoid the appearance of favoritism. Davis said that she had conferred with the City Attorney’s Office and understood she had “no legal conflict of interest with Collective Impact” at the time.

The letter did not mention her connections to Spingola.

The mayor reiterated that she had immediately asked Davis to resign. She said all Dream Keeper funding has been “frozen until further notice” and that the Controller’s Office was auditing the initiative “to preserve the integrity of the program.

The Mayor defended the achievements of the initiative, crediting it with providing down-payment assistance that helped Black residents become homeowners, support for small businesses, and other resources for arts and culture.

“DKI was designed to right the wrongs that have occurred to the city’s Black community,” she said. “I remain committed to the program and stand by its good work.”

Breed said she intended to continue funding Dream Keeper programs once the Controller’s Office completed its audit and the city took action to fix any issues identified in the review.

Breed’s leading opponents in the mayor’s race have seized on the Dream Keeper reports to further criticize her leadership of the city and argue that voters should not reelect her in November. Her rivals doubled down on those critiques after her Tuesday statement and said they were unsatisfied with the mayor’s response.

“London Breed has overseen unprecedented corruption and it continues to unravel around her,” said Supervisor Ahsha Safaí, one of the four major challengers to Breed’s reelection bid. “She needs to answer the tough questions about what she knew and when she knew it. It seems to me that this response is only a reaction to media reports.”

Safaí sought to link the Dream Keeper reports to past issues with the her administration’s management of single-room occupancy hotels for the formerly homeless. A 2022 Chronicle investigation exposed squalid living conditions in the hotels, leading Safaí to sponsor a successful ballot measure that created an oversight commission for the city homelessness department.

“This mayor’s administration is rotten to the core,” Safaí said.

Board of Supervisors President Aaron Peskin, another mayoral candidate, said Breed’s statement was “too little, too late” and he planned to press for more details at a public hearing about Dream Keeper that he hoped to hold by month's end. Peskin said he still planned to ask Breed to appear at the hearing, along with unnamed witnesses who he said had direct knowledge of what he described as a “breathtaking” amount of “unethical behavior” at the Human Rights Commission.

“I can tell you with confidence that what’s come to light so far is only the tip of the iceberg, and this goes directly to London Breed,” Peskin said.

Mayoral candidate Mark Farrell, a former interim mayor, also panned Breed’s statement.

“What a joke,” Farrell said. “If this is her signature initiative, the fact that she did not know how every single dollar was being spent is either complicity or complete negligence. In either case, San Francisco deserves better.”

Daniel Lurie, a nonprofit founder and Levi Strauss heir running for mayor, said in a statement that giving support to San Francisco’s Black community — the goal of Dream Keeper — is “critically important.” He said the problems with Dream Keeper had “the greatest impact on those most in need” and blamed Breed for using her signature program to steer money to a department under her control with insufficient oversight.

“It’s all part of the same City Hall insider formula, grow the system and exploit it for your personal benefit,” Lurie said. “To fix our biggest problems we need new accountable leadership, and it’s not going to come by replacing one corrupt insider with another.” infinity game table