March 23, 2017; Post and Courier
Before we begin, we remind you of our recent webinar, entitled “Maximizing Nonprofit Internal Controls.” It could save you a world of hurt.
The former bookkeeper of the Charleston, S.C. nonprofit organization People Against Rape, Joyce Fotheringham, was sentenced on March 16th to 18 months in prison after she pled guilty to one count of forgery. She had been accused of falsifying grant documents involving more than $50,000 between 2010 and 2012. Her sentence includes credit for more than four months she has already served in custody.
The damage to PAR was greater than the actual embezzlement of funds. Newspaper reports refer to a “lengthy investigation” revealing that the nonprofit’s books were “in disarray.” As a result of Fotheringham’s criminal activity (and then leaving the state), PAR lost $300,000 in grant funds and the organization had to lay off all staff. Some staff were owed money and reached a settlement with PAR after the employees had filed a lawsuit.
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The board of directors decided to continue operations using an all-volunteer approach while attempting to revive the flagging organization. In a 2013 interview, PAR’s then-board president Dean Kilpatrick said, “The easy thing to do would have been to say this is impossible, we can’t do it, we’re going to declare bankruptcy, we’re going to fold our tents and go away. […] For adult sexual assault victims in our area, if PAR doesn’t do it, there would be nobody to do it.” Kilpatrick was an unusually passionate and committed board member, having been a founding board member and involved in some capacity for 39 years.
The good news is that PAR has rebounded, once again having grant support and paid staff. Fotheringham was not ordered to pay restitution to PAR as part of her sentence because the court apparently believed Fotheringham had no resources with which to pay. PAR’s executive director left open the possibility of a civil lawsuit to attempt to recover at least some of the funds.
The news reports do leave some unanswered questions, such as whether the five-year delay in prosecuting Fotheringham was due to her leaving the state in 2012 and what caused her to return to South Carolina. PAR’s experience reminds us that, even for very small nonprofits, administering grant money is serious business with serious consequences. Regardless, PAR also shows us it’s possible to survive and recover from a catastrophic criminal event, even though it can take years and lots of volunteer leadership commitment to make it happen.—Michael Wyland