by Ashley Kasprzak, JVA Consulting
I’ve been called gullible, trusting, “a Pollyanna”, and many more niceties in my life. I have never really minded those labels because they are somewhat true. I like to think that most people are good at their cores. At the same time, good people sometimes make very poor decisions. That’s why boards of directors should respect and trust the executive directors that they hire AND provide appropriate oversight.
I recently had a client that lost several hundred thousand dollars a few years ago due to an executive taking funds. Legal counsel recommended that the case not be pursued because of the cost involved, lack of records and uncertain outcome. I was somewhat surprised by this advice, yet understand that most legal cases are expensive and risky. A similar story on a bigger scale was in The Denver Post today featuring the Colorado Association of School Executives (CASE). It’s a well-respected organization that had an irresponsible leader for over seven years. That leader embezzled $800,000 to feed a gambling addiction and his desire to travel.
Fortunately the judge deemed that the defendant and his family will likely pay the restitution, but in the meantime, the organization has had to cut staff by 25 percent and decrease programming.
The Sarbanes-Oxley Act of 2002 makes it very clear: board members are the governors of a nonprofit organization. They must review the financial statements monthly. They must ask questions if they don’t understand something on the reports. Our culture is so fortunate to have hundreds of thousands of nonprofits nationally (over 23,000 in Colorado alone) that create new opportunities for people, provide support for those in need, help them environment, elevate art and more. The community leaders who serve on these boards are responsible for ensuring that funds are used as expressed in the budget and that documents are retained to prove that.
You can learn more in a webinar that JVA is going to release in four days, How to increase accountability and transparency in your nonprofit. Watch for it and invest in your organization’s accountability.