October 2015: Nonprofits Today

Transparent nonprofits build trust

Bob Gorman

Bob Gorman

An employee of the Jefferson Rehabilitation Center was recently arrested for allegedly stealing $45,000 from the bank accounts of JRC clients.

Such news is the last thing any nonprofit wants to hear. But the good news is that JRC did the right thing — it investigated the allegations, called police and is now letting the chips fall where they may.

Years ago, many nonprofits wouldn’t have taken that action. It was not unusual for a nonprofit — upon learning its bookkeeper had pilfered thousands of dollars — to quietly fire the employee upon the promise that the thief would quietly pay the money back.

The strategy sounded attractive: you got your money back and you didn’t get any bad publicity (and potential loss of donors) that a police investigation and news stories would generate.

The only problem is that non-punished and non-publicized embezzlers were free to go work for other nonprofits and try to steal again, only this time with more experience on how to avoid detection.

It happened in 2007 when the Watertown Urban Mission found itself missing $20,000, and also found out that the employee responsible for the theft had done a similar thing at another local nonprofit but was simply let go.

Worthy causes besides nonprofits have also been taken to the cleaners: A St. Lawrence County priest was duped out of hundreds of thousands of dollars by a woman lying about her personal travails; a man who started a program to take “wounded warriors” on fishing trips on the St. Lawrence River says his girlfriend ran off after stealing more than $3,000 donated to the program; a former Fort Drum soldier whose wife died after giving birth to twins, stole and gambled away thousands of dollars donated to him to help in the care and raising of his children.

But nonprofits are at particular risk when it comes to the subject of theft. All the years of good work and service to the community can evaporate quickly through embezzlement. If the theft is large enough, the nonprofit may not have time to tap enough resources to ensure cash flow to pay salaries, rent, etc. Embezzlement killed CAVA in St. Lawrence County and it almost killed the Family Counseling Services in Jefferson County.
Nonprofit execs all say the same thing: “I have to run this place like a business.” But it’s tough to publicly declare that when you would rather your daily message be: “Help us help the people in our community who need the services we offer.”

State charity laws, fortunately, require nonprofits to be run like businesses. Executive directors are supposed to be hired and answerable to a board of directors; bookkeepers are supposed to ensure deposits, receipts, etc., are seen by more than just one set of eyes. Audits and 990s must be filed yearly.

To do that, nonprofits are required to spend a lot of money making sure the money the public donates is accounted for and used as advertised. So when someone asks, “How much of my donation will actually go to a service?” the honest answer is: “The first portion of your donation will help pay our staff to make sure that most of your donation will help pay for a service. Later, we will take another portion of your donation to pay an auditing company to ensure the middle portion of your donation was actually used to pay for a service.”

The list of nonprofits that have been the victims of theft is longer than any of us would like. And when one is hit, the rest of us silently acknowledge, “There, but for the grace of God, go I.” We all hire people and that means we are all potential victims of deeply flawed individuals.
But the enhanced accounting methods our nonprofits have installed and their willingness to call the cops makes sure that those who have no qualms about stealing money — and thus services from the least among us — will be found out and punished.

And it also means that when a nonprofit comes forward to acknowledge an embezzlement, it is actually a nonprofit you can trust.

Thanks to our communities

The United Way Food Drive on Sept. 11 generated more than 31,000 food items.

Thanks to major efforts by Watertown Savings Bank and Northern Credit Union, we surpassed last year’s total of approximately 30,000 items. And we couldn’t have set up tables, and collected and loaded all that food without the help of volunteers from Jefferson County government, Credo and many of our nonprofit partners.

To see photos and videos of the event, go to facebook.com/United-Way-of-NNY-578898112153367/timeline/

Bob Gorman  is president and CEO of the United Way of Northern New York. Contact him at bgorman@unitedway-nny.org or 788-5631. His column appears every other month in NNY Business.