This newspaper’s Dec. 11 opinion column, “To do good, donors must do their homework,” identified that this is the time of year that many people make donations and contributions to nonprofit organizations and went on to elaborate that donors should “do their homework” before giving.
People should indeed do their homework before providing financial support to charitable organizations, however, to imply that smaller nonprofit organizations are “attractive targets for misconduct” because “they have relatively few financial controls in place, and they’re based in small communities where the employee who handles the agency’s checkbook could be a neighbor or acquaintance, making it uncomfortable to question that person’s actions” is simply not accurate.
Implying that since smaller nonprofits may not be evaluated by national groups, such as Charity Navigator, in the same ways that larger nonprofits are, that these smaller groups are somehow more susceptible to fraud, is simply not true. While the editorial does state that no charity is immune from wrongdoing, perhaps a more accurate statement would be that no organization, including for-profit organizations and corporations, are immune from wrongdoing.
According to the Association of Certified Fraud Examiners’ 2012 report, more than two-thirds of the victims identified in the report were from for-profit organizations. Nonprofit organizations made up the smallest portion of the dataset in the report, accounting for slightly more than 10 percent of reported cases. Privately owned and publicly traded organizations also continue to suffer the highest reported median losses.
The report’s key findings are instructive and a must-read for nonprofit board and staff members with financial oversight responsibilities.
The Maine Association of Nonprofits has for 20 years promoted and supported the highest standards of professional and ethical conduct among nonprofit leadership through its many programs, resources and services.
In an effort to help nonprofit leaders manage their organizations around best practice standards, the association developed its Guiding Principles + Practices for Nonprofit Excellence in Maine 10 years ago. These resources consist of comprehensive management training programs, assessment tools and a free resource library to assist nonprofit staff and board leaders in developing practices that adhere to the highest professional and ethical standards.
The significant majority of nonprofits in Maine are well managed and recognize that operating in an ethical and accountable manner is essential to building public confidence and support for their mission.
When unethical situations do arise, they should be examined through the lens of the unique elements of systemic failure that created them, and nonprofit staff and volunteer leaders should recognize that these cases can be avoided easily when nonprofits access resources, such as those available through the association, to build appropriate transparency and accountability practices.
Stories of unethical behavior should serve as a stark reminder to organizational leaders in all sectors to review and assess their financial practices and develop more effective checks and balances. Well-managed organizations in all sectors proactively address and seek to eliminate the opportunity for these kinds of situations to occur.
Lori K. Gramlich is director of Public Policy + Strategic Communication for the Maine Association of Nonprofits. Email at [email protected]