Portland City Council candidate Jo Ann Hardesty said Wednesday that no "shady deals" took place under her leadership of Portland's NAACP chapter. Her remarks came in reaction to news reports she steered more than $13,000 from the nonprofit she ran to herself and her consulting firm.

In an interview Wednesday, Hardesty said she is "disappointed" at how Oregon Public Broadcasting characterized her management of the NAACP chapter in the radio outlet's lengthy report published Monday. Yet Hardesty said the reporting is true.

Hardesty said her consulting business was paid $10,000 by the NAACP chapter during her third year as its leader, a time when her divorce placed her in financial hardship. She said the NAACP paid her a monthly stipend, even though she continued to describe the organization as "all-volunteer." And she acknowledged that income, totaling more than $13,000, was not reported to the IRS. She says she will now report it and pay any back taxes owed.

In the interview, Hardesty defended her actions by characterizing the NAACP chapter she headed as different from other nonprofits. She said it is "misleading" to compare the financial practices of the chapter "to how traditional nonprofits operate." She intimated that the small and struggling NAACP chapter would naturally have looser financial controls than other nonprofits with full-time employees. The NAACP chapter Hardesty led is required to follow the same laws as other tax-exempt nonprofits.

At the time she became president of the chapter, it was effectively defunct. In the time since, its membership and influence have rebounded. "I have invested my heart and soul in rebuilding that branch and I am very proud," Hardesty said.

Hardesty said the NAACP looked only to her consultancy when deciding to whom it should contract with for a $10,000 project putting on an event on ways to boost voices of people of color in Oregon politics. She said that is because of her expertise, which includes decades spent as a social and racial justice activist and two terms as a state representative.

Hardesty said the NAACP chapter executive committee "was involved" in decisions about the contract; OPB reported the committee discussed the contract but never voted to approve it.

Asked to comment on the appearance of the financial arrangement, Hardesty said, "I can see how people can spin things to make it look like there's some nefarious activity that took place."

She added: "There have been no shady deals. ... There has never, ever been any embezzlement at the NAACP under my leadership."

Loretta Smith, a Multnomah County commissioner who is Hardesty's opponent in the race for city office, used the term embezzlement Tuesday to describe Hardesty's actions as reported by OPB.

Hardesty said the monthly stipend began only after she became divorced and needed the income. The payments were approved by the NAACP chapter's executive committee, she said.

Hardesty said the income was not reported to the IRS because crucial tax forms were "missing" and she and her tax preparer did not notice. It is her CPA who "tells me what I need to pay and to who," she said.

Smith said Hardesty should repay the money to the NAACP. Hardesty said Wednesday that except for the IRS she has "no reason to reimburse anybody for anything."

Asked if she has been paid by other nonprofits for which she has served as an officer, Hardesty said, "I don't think so." She said her consulting firm has done work for at least one nonprofit for which Hardesty served on a committee that approved grant spending.

Hardesty said her focus is still fully on the general election, now fewer than 50 days away.

"Not only am I planning to stay in the race, I plan to win it in a landslide," she said.

– Gordon R. Friedman

Have a tip about Portland City Hall? Contact Gordon: GFriedman@Oregonian.com