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March 20, 2010; News Tribune | This story about the financial collapse of a nonprofit affordable housing developer in Tacoma, Washington is full of charges and countercharges about what led to the alleged misspending of $2 million of public funding. Much of the debate concerns which agencies should or shouldn’t conduct an investigation of the organization’s $4 million housing grant from the state’s Commerce Department and an additional $400,000 “brownfields” restoration loan, the mix of funding within which the alleged misspending occurred.

But of interest to us at NPQ is the backstory of what led to the collapse of the organization. Some insiders suggested that it was a management problem, executive staff fired for mismanagement abetted by a board failing to provide oversight (the specific charge lodged by the organization’s former CEO and CFO).

The CEO and CFO blamed not only the board, but the economy. When organizations such as this one (the Martin Luther King Housing Development Authority) die, we need to conduct organizational autopsies. If the organization is now dead, what did we see and know a year ago that could have foretold its demise? What did we actually see and know two years earlier that contained the seeds of the organization’s collapse?

The clues were there but not recognized and acted on. If we’re going to learn from stories like this one, the sector ought to be conducting autopsies so that there will be fewer debates about how to find and recover misspent funds.—Rick Cohen