September 21, 2015; Lawrence Journal-World
A few days ago, NPQ published a newswire about a food bank in Lawrence, Kansas, which found itself in the midst of a financial meltdown after its CEO—also the city’s mayor—neglected to pay $60,000 in taxes. Later, it was found that he had also overpaid himself to the tune of $50,000. At the time, I wrote that I have some knowledge of Lawrence, having worked in an agency there some decades ago, and I suggested that the city and county would find the best ways forward.
And, indeed, the response of the two major private funders has been admirable. The United Way of Douglas County and the Douglas County Community Foundation have opted to see this as a learning moment, and they are co-sponsoring a workshop on financial oversight for nonprofit board members and anyone else who is interested.
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Marilyn Hull of the Community Foundation says that the incident has sparked a lot of conversation within the nonprofit community, and although this particular kind of problem is not widespread, they see it as an opportunity to remind board members about their oversight duties while helping them learn what to look for in various kinds of financial documents.
Meanwhile, the board of Just Food has instructed its attorney to relay to law enforcement any findings that come from the internal investigation.
Part of what gets in the way of recovery from an incident such as this is the tendency for boards to offload responsibility and fail to communicate their actions taken in the wake of the event. In this case, not only were those things done, but others around the agency are using the moment in a way that will balance the negative effects with some that are more positive. Most important of all, they have advertised that fact, thus reassuring local donors that oversight is not wildly out of control in local nonprofits and will be even further improved.—Ruth McCambridge