Is Your Nonprofit Organization Truly Transparent?

In my job, I constantly contact donors and ask them why they give to our organization. They say it is a matter of trust. They say we trust you and especially value your low cost to raise a dollar.

I was involved recently with a solicitation of a potential foundation. I met with several officers of the foundation. After the facilities tour, we sat down to discuss the organization. They asked a number of probing questions about how monies are spent, how monies are invested, and the integrity of officers and staff. I said, with strong conviction, that our organization was transparent. At that point the matriarch of the foundation said that word is "tossed around a great deal." I understand the reason for that comment.

I remember the article and situation surrounding the 2008 case involving the volunteer treasurer of the Madison County Indiana Humane Society who was charged with using $65,000 of the charity's money to buy jewelry and makeup. According to Stephanie Strom from the New York Times, a report the same year based upon data from the Association of Certified Fraud Examiners found that all organizations, whether government, for-profit or nonprofit, lose on average 6 percent of revenue to fraud each year.

I also read a 2014 article by Christina Bush, wealth manager at CB Wealth Advisory, that alerted to those in our profession to "Beware of Fraud of Non-Profit Organizations." Her research through the New York Times indicated that $40 billion to $50 billion per year nationally that is lost in fraud in nonprofits and scandal is found in 20 percent of philanthropic organizations. She noted that it is wise to be skeptical and do your due diligence first before involving yourself or your financial support in any charity.

Key points made by Bush in her research highlighted the following: