Ethical Responsibility of the Not-For-Profit Sector

I have worked in the not-for-profit sector for 39 years. That is a long time to make philanthropy one's career. I have had a number of opportunities to leave the philanthropic career interstate but have chosen to remain on this interstate because I care about others before self.

I want to make a difference and use my talents to help others. I believe every person in this profession has a moral and ethical responsibility to promote the profession in the best way possible. My dad said that your reputation is everything. I also believe the profession has a reputation that is everything. That is why I have zero tolerance for fraud and abuse in our profession.

Brian Collins, CPA, an accountant with Eisner Amper, noted that the Independent Sector reported that there are more than 1.1 million not-for-profit organizations in the United States that employ 13.7 million individuals. This sector generates an estimated $1.5 trillion in revenue each year. The Association of Certified Fraud Examiners estimates that organizations lose 5 percent of annual revenue to fraud, which means the not-for-profit sector is a victim of $77 billion in estimated annual losses due to fraud.

Collins also noted besides the funds lost, the impact of fraud is felt in damage to the organization's reputation, negative publicity, lower employee morale, cost of litigation and investigation, and disruption to business operations. The not-for-profit sector is often more susceptible to fraud and abuse due to the nature of many organizations. Excessive control is often placed in a key founder, director or volunteer. Many not-for-profits do not have the resources for financial oversight, volunteers with too much confidential information, boards with limited operational expertise, methods that can be abused or hidden practices tolerated because of the fear of public exposure.

Some examples of fraud include deceptive fundraising practices or fraudulent financial reporting. In some cases, some not-for-profits handle a great deal of cash, which is tempting to unethical behavior. I had to fire an employee who was caught repeatedly stealing cash. In fact, in two other positions I found a number of uncashed, large corporate checks in a desk of an employee long after the checks were written and another employee using whiteout to change the payee names on checks to her own name.