A Matter of Priorities

By Yna Moore

Does contemporary philanthropy benefit the needy? An increasing number from within the sector and the public don’t think so, and that’s problematic, said Susan Raymond in her speech during the 5th annual summit of OnPhilanthropy.

She implored the philanthropic community to take to heart the growing number of voices that have accused the sector of abandoning the needy, because the distrust and skepticism call into question the sector’s role in society:

“Those asking the questions are not the hairdressers of Hopkinsville or the
good old boys of the Koffee Klatch Kafe. The questions are not being asked
out of ignorance. They are being asked out of observation. … It is a
painful accusation but it is a fair question, because we hold the public trust;
we are the stewards of the societal commons. … It is a question that lies at the
heart of the reason for our very existence, the reason the people shoulder our
tax burdens. It is the essence of our compact with the American people,
the central core of their trust in us.”

NCRP has been one of the leading voices calling for change in foundation grantmaking practices for over 30 years, and it’s heartening to hear a well-regarded leader from the sector acknowledge the need to take the criticism seriously.

Her suggested rebuttal to these criticisms seems reasonable. Indeed, the concept of poverty and need has been a source of philosophical debate that predates philanthropy. There is no arguing that just as many around the world and in this country are in dire need of food for the body, there is also a human need for food for the mind and soul through the arts, religion and sciences. And it is also true that change—real systemic change—takes time, and the cause and effect of circumstances leading to change are not necessarily linear. In addition, the solutions to the problems our society faces today—such as poverty, lack of access to basic services, unemployment and environmental degradation—are as complex as the problems themselves. Consequently, there is no magic pill, no magic formula.

As Dr. Raymond dissected the arguments of critics, her rebuttal implicitly supports many of the ideas that critics have suggested to correct the philanthropic sector’s shortcomings in responding to the needy. Foundations should be more strategic in their grantmaking by using a variety of tools that more effectively respond to the needs of marginalized groups. This means that funding policy advocacy and grassroots organizing is just as important as funding direct services to address both the sources and symptoms of poverty and injustice. This means providing more flexible, multi-year support to nonprofits, not just program-specific grants for nonprofits serving the disengaged.

Finally, funding the arts and sciences is not bad at all. In fact, these are essential for people and civilizations to thrive. Although there is considerable wealth tied to philanthropic institutions, these resources are, nevertheless, scarce and limited compared to the tremendous needs in our society. As stewards of these resources, foundations must use their philanthropic dollars wisely and responsibly because at the end of the day, this all boils down to priorities.

These priorities will reflect the values of our society. What should we, as a sector, prioritize? Should people that make our work possible, i.e. the tax paying public that subsidize our sector, have a right to question how their tax dollars are being put to use? Absolutely!

If foundations don’t question their own priorities and don’t start doing more to benefit those with the least wealth and opportunity, not only will the critics grow in number, but their elected representatives might decide it’s time for the government to step in.

Anna Kristina ("Yna") Moore is communications director at NCRP.

Need for a Religious Conversion

Need for Religious Conversion
By Gary Snyder

We have seen it with nonprofits. We’ve seen it with foundations. And now we see it with religious organizations and no religion can plead innocent.

A little over a year ago, a survey by researchers at Villanova University had found that 85 percent of Roman Catholic dioceses that responded had discovered embezzlement of church money in the last five years, with 11 percent reporting that more than $500,000 had been stolen. A truly startling statistic!

A few religious leadership organizations have called on their followers to adhere to “best practices”. Needless to say their pleas have been left on dead ears, with untold numbers of religious related organizations getting into trouble.

Churches, church auxiliaries and other religious affiliated institutions enjoy special protections. Just as other nonprofits, religious organizations are exempt from paying taxes, but are still obligated to abide by tax laws regarding accurate accounting, executive compensation, insider dealings, but unlike virtually all other charities, are not required to file IRS Form 990. This Form is a snapshot of the organizations finances and the single most illuminating document available for the publics’ scrutiny.

The amount of abuse is staggering and growing. In the latest count—from 1998-2001—religion related misdeeds totaled $2 billion, up from $450 million for the previous 5 years. A lot of hands caught in the proverbial cookie jar.

In Cleveland a former dioceses employee is accused of stealing $17.5 million over an eight-year period. Across Lake Erie another fraud was brewing at a Catholic Church (MI) where a secretary was stealing over $1 million over a decade and until recently all eyes were on the Priest.

At Crossroads Christian Church a congregant stole $50 million from pastors and church-goes alike. At Daystar Assembly of God Church (AL), church leaders swindled the church membership resulting in the loss of the church.
Possibly the largest scam perpetrated on a congregation was the Baptist Foundation (AZ) where about 11,000 trusting parishioners and others, principally seniors, were defrauded of more than $550 million.

But in too many instances, the religious leadership is, in fact, treating themselves to the offerings. At St Vincent’s Ferrer Church, the priest had “off of the books” personal investments of over $3 million. Forensic accountants estimate that, in reality; over $8.6 million was pilfered. At St. Joseph Catholic Academy (NJ) the pastor stole $600,000 from raffle money.

The stories continue…with all seeking to repair almost irreparable reputations in what is a seemingly crisis-ridden religious sector.

Just as the Internal Revenue Service has “advised” other tax-exempt organizations such as foundations and other nonprofits, it has put religious associations on notice that such abuses will not be tolerated. Within the last year, the IRS sent out a strongly worded letter reminding religious organizations---of all denominations---that they should be mindful of its strict guidelines. Some have abused their tax-exempt privilege and are currently under investigation.

There apparently aren’t any internal controls in place. There needs to be more transparency. A beginning step in facing this massive problem may be politically not palatable. Open up the books. Control the coffers. List the salary and benefits for key employees. List the top employees and their compensation. Note any relationship between board members, employees and contracts awarded.

Just a first step, but lawmakers must have the political will and let the sunshine in.




Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.

Foundation Self-Regulation Falls Short

By Julia Craig, Program Assistant, NCRP

In this March 3 “The Insider” article in Philanthropy Journal, a “veteran foundation official who wishes to remain anonymous” takes the foundation world to task. According to the author, the large national foundation where s/he works talks out of both sides of its mouth—on one hand, it publicly embraces diversity and open grantmaking practices, while on the other it internally quibbles over how a potential grantee looks and acts and whether potential board members would ever disagree with foundation practices.

"We, in fact, live a weird dual life. We are the kings and queens holding court as people come and plead their cases.

We probably even sit in the big chair or at the end of the table when the people come to see us.

In one of my previous positions, this was particularly loaded with meaning as many of the supplicants were people of color and the foundation professionals were all white.

For grantseekers who did not look and sound like us, we constantly talked in our internal meetings about how well-spoken or well-dressed they were or were not.

And if we detected an "attitude," such as any hint of questioning that we understood their situation, it was an easy way to dismiss people for having passion about their community.

We were really, really scared of that."

When foundation staff members are knowingly complicit in grantmaking practices that discriminate based on appearances and perceptions, philanthropy is failing at its job. The numbers show that there is a dearth of funding for ethnic minorities and for civil rights work. The Insider reveals the disturbing mechanics behind such trends: discrimination is real within the foundation world and it is overt.

Foundation leaders who are more concerned with playing it safe and the weight of tradition than with achieving the foundation’s mission are doing a disservice to the public and to their own organizations. What the author implies but does not explicitly say is that foundation leaders are afraid that funding for organizations addressing systemic social problems or serving traditionally marginalized members of society might succeed, disrupting the power dynamic in this country and resulting in a redistribution of wealth. The analogy of foundation staff as “kings and queens holding court” is particularly disturbing; philanthropy should be about serving the public interest, not satisfying the egos of donors or staff of grantmaking institutions.

Foundation missions tout lofty goals, from reducing poverty and fighting injustice to stopping the spread of disease and supporting social change. Despite such inclusive goals, The Insider claims that during board meetings, leaders at the foundation where s/he works discussed a potential grantee’s dress and mannerisms as a legitimate consideration in the grantmaking process. Foundations often advocate for self-regulation. Unfortunately, in addition to anecdotal evidence from The Insider, foundation behavior shows us that self-regulation is failing. In the past, efforts have been made to develop standards for the sector, but they have fallen short of having a real impact on foundation behavior and amounted to unenforceable suggestions for grantmakers. Glaringly absent from the list of organizations and individuals who have signed on to the Principles for Good Governance, for example, are prominent foundations who are influential philanthropic leaders.

As NCRP moves forward in developing its standards for measuring Philanthropy at its Best, one of the biggest challenges we face is breaking through the traditional culture among foundations. While many foundation trustees undoubtedly have the best of intentions, it is clear that there is a deeply rooted system of discrimination at work. Whether conscious or otherwise, this is a serious barrier to foundations achieving their missions.

Foundations' Bottom-Up Initiatives on School Reform

by Aaron Dorfman

Paul Tough’s New York Times Magazine article ("How Many Billionnaires Does It Take to Fix a School System," March 9) guided discussion with experts about how philanthropy can best improve public education was great to see, and there were some good ideas put forth. But the experts forgot to mention what many view as the most promising approach to improving our schools. There’s a movement afoot to fund community-driven school reform from the bottom up. Foundations are increasingly funding community organizing groups who engage parents and other community residents in building power to hold local school officials accountable. They see building community power and accountability as the way to effect lasting change in complex systems. Large foundations like Gates, Ford and Mott, and dozens of smaller ones have banded together in various multi-million dollar reform efforts—and they’re getting results. We need more philanthropic support for these bottom-up initiatives, not for top-down schemes of grand design.

Julie Kohler, director of evaluation and program manager for Public Interest Projects' Communities for Public Education Reform, talked about a collaborative of funders supporting community-driven school reform in the fall 2007 issue of NCRP's Responsive Philanthropy.

Aaron Dorfman is the executive director of NCRP.

Should Community Organizing Rebrand Itself?

By Lisa Ranghelli, Senior Research Associate, NCRP

Last weekend’s Sunday New York Times Magazine (3/9/08) was devoted to philanthropy and charitable giving. I’d like to comment on two interesting articles on current philanthropic thinking about how to best measure the impact of grants and how to determine which strategies are most likely to effect desired change.

Jon Gertner’s article, “For Good, Measure,” raises some important questions about the extent to which funders should seek a ‘return on investment’ for their grants, and how much money they should spend evaluating and measuring impact. The article focused primarily on big fish in philanthropy like the Bill and Melinda Gates Foundation and the Rockefeller Foundation. After all, they have the kind of resources purported to be needed to have an impact on entrenched problems like poverty.

Yet there are thousands of small and mid-size foundations across this country that might not have the resources to conduct major evaluations, but they should also be thinking about their impact. In fact, these funders could be making a much more significant difference—and some are—by realizing that investing in effective grassroots organizing and advocacy can help achieve long-term systemic change on issues they care about, from housing and homelessness to workforce development and education. Speaking of education…

In “How Many Billionaires Does It Take to Fix a School System?” Times Magazine editor Paul Tough brought together a group of ‘interested parties’--two funders, the NYC schools chancellor, a charter schools CEO, and someone from a conservative think tank-- to participate in a roundtable discussion about changes in education philanthropy. He asked the group to advise a hypothetical wealthy donor as to how he should spend $2 billion to make a difference in the field of education. Much of the discussion centered on identifying visionary chancellors and fostering competition through charter schools, with some attention to infrastructure and human resource development. Perhaps this should not be surprising, given who was having the conversation.

There were no teachers, students, parents, or other community members represented around that table. Yet these are the people most affected by schools issues and often the ones in the best position to make change happen through effective organizing and advocacy. For years foundations have used the argument that “organizing and advocacy are hard to evaluate, and it’s hard to measure their impact” as a reason (excuse?) to not fund such strategies. Yet more and more information is coming to light that challenges this claim.

A great example is the forthcoming Annenberg Institute for School Reform report commissioned by the Mott Foundation, which assesses the impact of organizing groups on education reform and student outcomes in seven cities. (Full disclosure: one of the groups studied was People Acting for Community Together in Miami, formerly run by NCRP Executive Director Aaron Dorfman.) Anyone who doubts that the impacts of organizing can be quantified, measured, and linked to specific performance indicators should plan to check out this report when it is released on March 26th here. It is notable that two of the cities included in the report are New York City and Los Angeles, two places held up for their innovations in the Times’ roundtable discussion. The Annenberg report should offer a very different perspective on ways to improve outcomes for students in those two cities, as well as the five other sites.

In fairness to the Times roundtable participants, their conversation eventually touched on issues of nonprofit capacity and the role of policy advocacy. Vanessa Kirsch, who runs a venture philanthropy firm, talked about the need to provide multi-year support to non-profits run by “social entrepreneurs,” so they have time to build their capacity and bring their innovative ideas to scale. Who are these social entrepreneurs? Low-income community leaders and organizers do not seem to be included in this group, but why not? Grassroots community organizing is about building social capital to achieve systemic change. Chris Doby, program officer at the Mott Foundation, made the case that post-Katrina organizers were in fact social entrepreneurs here.

Perhaps organizing groups need to rebrand themselves to fit in with the new lingo of philanthropy. The phrase “community organizing” causes many foundation trustees to cringe in horror, as they imagine Saul Alinsky rising from the dead and banging down their door in the middle of the night. This visceral feeling about organizing prevents trustees from supporting good work on the issues they care most about. It works against their own self interest. Would they feel better knowing that they were investing in social entrepreneurs who can offer them a quantifiable return on their investment?

To what extent do we buy into the business-oriented language sweeping across the philanthropic sector, and to what extent do we push back?

Foundations Should Embrace Diversity and Effectiveness

By Aaron Dorfman

Last week, six hundred foundation leaders from across the nation were in San Francisco, Calif. for a conference on grantmaker practices that improve nonprofit results while a major controversy involving foundations continues to brew in the California Legislature.

The conference marked the tenth anniversary of Grantmakers for Effective Organizations (GEO), a coalition of funders focused on maximizing the impact of their grants. GEO is the place where foundation leaders come together to share resources and ideas that help them most effectively contribute to the success of their grantee organizations. When the grantees achieve their missions, the foundations also achieve theirs.

The legislative controversy is about AB 624, a bill that would require the largest California foundations to disclose diversity data about their boards, staffs, grantees and vendors. The bill passed the California Assembly and is making its way through the Senate. Assembly Member Joe Coto introduced the bill because he feels that foundations aren’t meeting the needs of his constituents and other communities of color in California.

With any rigorous review of the available data, it is clear that communities of color benefit from institutional philanthropy at rates far lower than one would expect. Nationally, less than nine percent of grant dollars are classified as intending to benefit racial or ethnic minorities. As a percentage of total grants, that figure has been declining over time. And while the available evidence suggests that foundations have been making real progress diversifying their staffs at the middle levels of seniority, chief executives and trustees of foundations remain overwhelmingly white.

But foundations exist for the purpose of having impact on the issues and causes they were founded to address, not to provide grants or hire staff based on race or ethnicity. Opponents of AB 624 argue that they make their funding decisions based solely on which grantees are most likely to achieve maximum impact and that race shouldn’t enter into the equation.

So are we at an impasse? Must grantmakers choose between being effective or embracing racial equity and diversity? Not at all.

Improving the societal impact of foundations and improving their support for diverse communities need not be mutually exclusive propositions. In fact, there is growing evidence that diversity and effectiveness go hand in hand.

A recent book, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies, by University of Michigan professor Scott E. Page shows convincingly that diverse organizations actually outperform more homogenous ones. “Diverse boards of directors make better decisions, the most innovative companies are diverse,” he states in an interview with the New York Times.

Foundation leaders who want results should consider seriously Page’s research. Grantmakers should embrace both diversity and effectiveness, and they should persistently seek to improve on both fronts. They need to go beyond race/gender/sexual orientation and should also include class to ensure that elites of different races aren’t the only voices listened to in philanthropy.

For the past decade, foundations have been advancing their ability to measure the impact of their work and that of their grantees. They’re getting better at knowing whether or not they’re making a difference. They should continue their efforts on this front.

But we also need better data on diversity in philanthropy. Improving diversity will help foundations increase their impact, but we won’t be able to tell if they’re making progress if they don’t measure and report on key diversity metrics. When the only diversity data that is available clearly shows that communities of color are getting shortchanged, elected officials can and should start raising questions. After all, foundations’ tax exempt status means these grantmakers are spending quasi-public dollars.

There are flaws with AB 624, but there is no question that foundations should embrace both diversity and effectiveness to ensure maximum public benefit from the valuable and limited resources that are entrusted to them.

Aaron Dorfman is the executive director of the National Committee for Responsive Philanthropy.

Philanthropy Must Address Structural Inequities

by Steven E. Mayer, Ph.D.


Until foundations address the structural inequities that contribute significantly to human suffering, their own effectiveness will be limited. Structural inequities show up in virtually all the data as gaps or disparities in the performance of our public and private systems, chronically favoring some groups over others. They represent fault lines in our society and its institutions, including philanthropic organizations themselves. If not addressed, they will drag down the performance of the very foundations and nonprofits that otherwise intend to do good.

Why, as frequent studies show, are African Americans turned down for a mortgage or business loan at a higher rate than Whites with the same credit histories? Clearly this favoritism is driven by false assumptions, even though it hurts the lender. It might take a more diverse foundation board to understand this is a problem, or to decide to address it, but it will take influence in the bank’s inner offices to change its practice. There is a role for influential White board members to step up and do some heavy lifting to create the space for a legitimate fix to structural inequities.

Why does an achievement gap exist between African American children and White children even as they start kindergarten? Upstream of kindergarten success are parents who understand the value of education, who encourage their children to learn, who spend supportive time with their children and their teachers. African American and White moms alike face staggering challenges juggling work, transportation, child care, health care, aging family members, and their own development beyond mere survival. African American dads, far more often than White dads, are gone or locked up, having been booked on suspicion since adolescence, and booked again because they’ve been booked before. Chronically hunted down and tagged with a record assures an African American male a lifetime of disenfranchisement, with far greater challenges in finding legitimate work, breathing room, or the right to vote. This is Jim Crow at its worst, still lethal, and well-documented. As James Baldwin put it, "The wonder is not that so many Negro boys and girls are ruined … but that so many survive."

Until these systems can be turned around, beginning with the justice system, and until those rebuked and scorned are permitted to put together a generation or two of fair and steady access to the fruits of opportunity, we’re going to have parents who have kids who are not ready for school.

The Black-White divide is not the only one needing fixing; all non-White ethnic groups are treated less fairly by the typically unwritten operating rules of public systems and private markets. Among Whites, rural areas are disfavored, as are those born to poor circumstances.

One can argue it’s for government to fix all this. One can argue it’s a matter of personal responsibility. The third sector, philanthropy, has a decent record in caring for many of the victims of such flawed policies and practices, but philanthropy-as-usual has not done enough to stimulate the development of more level playing fields. There is a world of opportunity for foundations and nonprofits to promote solutions to unfair system dynamics. Philanthropy can help create the commitment, resources, and skills for fixing what’s wrong. And yes, this kind of advocacy is perfectly legal.

Imagine the applause and support awaiting those working to extend the full fruits of society’s potential bounty to all. The winner of the 2006 Nobel Peace Prize was bankrolled by an American foundation in his early work in Bangladesh, lifting thousands out of poverty and setting an example now emulated world-wide. All it took was a good idea, good leadership, and the sustained commitment of a growing base of support.

To start, a foundation can create internal study time to explore the ways in which documented racial and other group disparities hold back good outcomes in its own program areas. Next, it can identify the dynamics that produce and maintain these disparities; typically this requires looking further upstream for the problems causing the casualties. It can listen to those who know these difficulties firsthand, and to authorities perhaps previously overlooked. Then, it can prioritize its resources to create a more muscular philanthropy capable of producing more balanced outcomes throughout society.

Nonprofits must send forward proposals that put pressure on the mechanisms that maintain these gaps. Of course, they must be assured by prospective funders that such ideas are favored. Foundations, for their part, can raise to the top and approve those credible proposals that put pressure on existing gaps. This would result in a different grants list than currently prevails.

Acting through able partners on the ground, a foundation can strengthen the relationships and networks that serve as the creative seedbed and community infrastructure that springs and supports good ideas. It can strengthen individual and organizational leadership to bridge the many divides needed to move promising solutions along to implementation.

The Boards and staffs of foundations are in a position to do a world of good, even staying within their existing mission. It’s not just about the diversity of faces on the Board and staff , though a respectful regard for others’ experiences would certainly help. It’s about how well Boards focus philanthropic resources on closing the gaps and reducing the casualties. Philanthropy can and must put its collective shoulders to these wheels. Until it does, and becomes more relevant to today’s society, we will continue to see mean-spirited systems and markets that contribute to substantial human suffering, and highly mediocre levels of philanthropic organization performance.


Steven E. Mayer, Ph.D. is director of Effective Communities LLC, and principal contributor to the website www.JustPhilanthropy.org

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How to Protect Your Agency’s Assets

By Gary Snyder

Public confidence is essential to America's 1.5 million charitable organizations and the 14 million–plus staff and volunteers. With the sector boasting over $3 trillion in assets, hundreds of articles and newsletters about the diminution of trust in the charitable sector have been written. This interest, in large measure, is the result of poor management of funds. These problems are not sporadic; these are systemic issues that are pervasive in all areas of philanthropy.

I worry about the confidence that clearly affects the public's willingness to donate time and money, shape the political and regulatory environment that governs charitable organizations, and the influence on morale within the charitable workforce.

Brookings Institution studies find only 11% of the public thinking that charities do a very good job of spending their money wisely. A very recent study from Ellison Research showed that 62% of the public believes that charities spend an inordinate amount of money on overhead costs (fundraising and administration).

Nonprofit Imperative, the monthly e-newsletter, finds that billions of dollars is absconded from charities, principally by those with whom we put our trust. The pilferers include top management, board members and financial staff.

So what needs to be done before the regulators---Congress and the Internal Revenue Service---tell the philanthropic sector how to run its agencies? Here are a couple of organizational tips to avoid a heart-wrenching discovery of fraud.

Executives should have some financial knowledge- nonprofit executives are surprisingly devoid of understanding of charitable finances. Frequently, they treat the books like their personal checking account. Most training financial seminars are lacking. They should give the executive the financial skills in which to conduct the financial end of the nonprofit. Based on studies of fraud, one central focus is the failure to demarcate between the financial staff and executive leadership.

Board members should have some financial knowledge-board members become glossy-eyed when the financials are discussed at meetings. Financial statements intimidate them. They prefer to talk about programming or good and welfare instead of budgets. Board members should be offered some tutorial so that they understand financials. In most instances it won’t raise their interest but will give them some idea as to what to concentrate on while reviewing the financials. For obvious reasons (one of which is control), many executives are not interested in having a board that is financial literate. As a board member, you should demand a tutorial.

Accountants should have significant knowledge about nonprofit accounting-most accountants subscribe to the theory that a business is a business. Charitable organizations are not for-profits and there are significant differences. A most obvious distinction is the degree that they have to adhere to Sarbanes-Oxley. Seek an accountant that has nonprofit experience and understands the many nuances that is integral to the charitable sector. We have experienced in our study of fraud that there should be an arms-length relationship between the charities decision-makers and the accountant.

Increase the number of independent (outside) members on the board

Establish an audit committee-an organization that has an audit committee should review if it operates within generally accepted guidelines.

Whistleblower protection-makes sure that there is a prohibition against taking punitive actions against employees who disclose information---illegal practices or violations of adopted policies---to the audit committee or any one else.

Records retention-a policy to maintain records for posterity purposes is important.

As part of updating your policies and practices, consider the following operational changes:

Four eyes-multiple views-staff should divide tasks so as to prevent illegal activity. Dividing the tasks is arguably the best defense against embezzlement.

Bank statement review-the executive should be the first to open and review bank statements, thus preempting manipulation of the documents by financial staff. In smaller organizations, reconciliation should be separated between 2 different employees or a board member.

Employee background checks-needless to say an employee background check is important for any new member of the staff. It is extremely important for those that are working in the financial area. Even though most employee thefts go unreported (because repayment and dismissal are typical), you can check to see if any prospective worker has had any problems with law. In your investigations, trust your instincts and explore and explore until you are comfortable.

Internal controls-few nonprofits have strong internal controls. Most charities have good intentions in developing them but getting around to developing them is another matter. As organizations grow, the internal controls need changing. Make sure the controls are operating at a level that will deter and detect fraud. Establish a code of conduct that will create a clear understanding of what is expected of all employees.

Watch employee’s life style-observing radical changes in employee consumption or travel may be a good tip-off to start monitoring the books.

Have a positive culture-demanding that employees stick to the internal controls and make sure that they (staff and rules) are frequently checked, will create a culture of adherence.

Purchase fidelity insurance-although having insurance will not deter embezzlement, it will cover, at least some of the losses. On the other hand, since the organization is often left whole, it may cover up any public knowledge of the misdeeds and enable the malfeasant to continue to his/her fraudulent behavior in another setting.

An overwhelming number of perpetrators of frauds do not get caught. There are hundreds and hundreds of embezzlements, thefts and larcenies at charities. As a result, there is a diminution of confidence in the charitable sector. Consequently, there is sufficient impetus to institute the abovementioned short and long-term barriers to malfeasance.

Smartness instead of indifference is the way to go. It isn’t that hard.




Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.