Friday, June 3, 2016

More Nonprofit Scandals (& Lessons)

More weirdly fascinating nonprofit scandals for you to ponder - and some lessons to learn from them:

Red Cross 2001
Folks who donated to the Red Cross after the 9/11 terrorist attacks were told all of their contributed dollars would go to help victims and their families. Yet the organization set aside more than half for operating expenses and reserves, a long-standing but never publicly stated practice. And fourteen years later in Haiti, the Red Cross repeatedly declined to say how its money was spent, despite previous pledges of transparency.
The result: Donors were outraged, the Red Cross was forced to make a public apology and redirect funds, and the charity's image was severely damaged.

Second Mile 2011
Former Penn State football coach Jerry Sandusky founded the Second Mile charity for children. He was indicted for sexual abuse with victims he got to know through his work there; the abuse continued for 15 years. Despite public accusations dating from 2002, the board allowed Sandusky to remain involved through 2011, paying him consultant fees of $57,000 annually. The board's initial public statements in response to the grand-jury report failed to announce any steps to protect the children served, instead insisting on its limited knowledge of the allegations.
The result: Second Mile's CEO was forced to resign in 2011. In 2012, Sandusky was convicted of 20 counts of child abuse and sentenced to 30-50 years (basically life in prison for the 68-year-old). And finally in January 2016, the charity filed for dissolution and ceased operations.

Susan G. Komen Breast Cancer Foundation (Komen) 2012
This saga centered around Komen's decision to cut its support for Planned Parenthood's breast screening exams for low-income folks, supposedly due to a new rule prohibiting funding for any group under government investigation. Yet news reports established that other groups being investigated were not defunded. In fact, the decision was drive by anti-abortion stances from board and staff members.
The result: Three days later, following massive outcry (largely on social media), Komen reversed its decision. That fiscal year, the organization lost $77 million in donations and its founder Nancy Brinker was forced to step down as CEO.

Fine Arts Museum of San Francisco (FAMSF) 2015
Well-known S.F. socialite, philanthropist, and FAMSF Board President Dede Wilsey donated $10 million in 2005 to support the de Young's new building. In 2015, she made a $450,000 payment to a museum staffer (according to her, a disability severance payment authorized by city law and FAMSF bylaws). This unorthodox use of museum funds was made without approval from the board or finance committee, and was revealed in a whistleblower suit by the former chief financial officer.
The result: The Attorney General's office has announced a tentative settlement in which anonymous donors would reimburse the $450,000. Four members of the board - one of whom was asked to contribute to the payoff - quit in opposition to Wilsey's leadership.

The recurring themes: influential leaders running wild; untruthful claims about fundraising and decision-making; figurehead boards in denial; clumsy disclaimers and coverups.

The lessons: Don't automatically defer to leaders with the loudest voices or the biggest circle of wealthy friends. Don't make decisions based on expediency or politics. Immediately acknowledge your errors, apologize, and present a plan to move forward. Know that ignoring a problem doesn't make it go away. Above all, make sure both board and staff understand their job is to act ethically in promoting your nonprofit mission.

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