Tuesday, February 28, 2012

Talking With Kids About Philanthropy

A few months ago my son told me "when I got freaked out, I just smiled, it helped me calm down." What a great idea. How’d he learn that? I thought. A few minutes later it hit me—duh, he learned that from me. (In a visit to the Mall of America, I told him that I smile on rollercoasters so I don’t freak out. Try it, it works.) You see, my son, at 8 years old, sings songs, uses words and does things sometimes that I’ve never heard or seen. I continue to assume he’s learning them from friends, at school or at day care. Imagine my surprise when he acted on something that he so clearly heard from me.

Yet, what does smiling, roller coasters, and freaking out have to do with philanthropy? Umm... not much really. Although I’m sure many people smile when making gifts. But, I use the story as a reminder to myself and others. That sometimes, teaching your children about something, like giving to charity or philanthropy, doesn’t have to be a big production or a big deal. Sometimes it’s just a matter of talking about it.

So, I’ve made a pledge to myself. Talk about those organizations that I support with my philanthropic dollars in front of my kids. Because even if we may not have millions of dollars to support our favorite charities—it’s important that he knows why we think our favorite charities are so special.

  • Your dad and I give regularly to a food shelf because we know that there are a lot of people going hungry in this economy.

  • Hey Max, I used to work at this organization that helped people when they are sick. I gave them $20.

  • I really like how your daycare is a community organization. They’re so welcoming to the community and our family. I’m going to make sure we give them a donation this year.

And sometimes, talking about it the simplest ways may just have an influence. My son had a birthday party recently and I encouraged him to not have presents. I said, maybe you could ask your friends to give to a charity? “Like one for animals” was his quick reply. After a few weeks and a birthday party sans presents, I told him he had raised more than $200. He grinned hugely and imagined a garage full of dog food—“That’s a lot of food for the dogs.”

—Amy Sinykin, Charities Reivew Council, Associate Director
Image: kidsandbills.com

PS. The fundraiser function at givemn.org worked great for the birthday party "presents".

Tuesday, February 21, 2012

Employee Fraud: What Can Nonprofits Do?

The saying “trust but verify” resonates more than ever in cases of employee fraud. Unfortunate situations like the incident recently surfaced out of Open Arms of Minnesota leave donors and nonprofits wondering “what can be done?” Open Arms, an organization that meets all of our Accountability Standards and has earned a place on our list of Most Trustworthy Nonprofits, is undergoing the painful experience of employee fraud through the discovery that a staff member was siphoning the payout of phantom food contracts totaling a loss as high as $156,000.

It’s important for donors and nonprofits to understand that no organization is immune to scams—no matter how accountable or transparent its operations might be. While there are legal restrictions to what can be said while a case is under investigation, once an incident like this occurs, transparency, as in all matters, should be the guide in communicating to the public. The tips below were provided by Michael Wirth-Davis, president and CEO of Goodwill/Easter Seals, whose own experiences dealing with employee fraud were shared at the Council’s 2007 Annual Forum.

Accountability practices to help nonprofits prevent scams:

  • Separation of duties within the finance department is critical
    Regardless of the number of employees, require two signatures on all checks. Include non-finance staff as part of the four members who can sign checks. Restrict use of CEO’s signature stamp and mandatory log entries when it is used.

  • Focusing on internal controls (just like safety drills)
    This should be an on-going responsibility of the Board Audit Committee and management, as well as the external audit firm. All accounts are reconciled monthly, with reviews and sign-offs. Use a lock box for all donations. Run all cash sales through store registers for retail operations. Deposit cash sales with store deposits.

  • Review internal controls
    A review of controls can lead to identifying areas of risk and vulnerability, which should then be shared with your Audit Committee.

  • Practice honesty, integrity, and accountability
    This should be part of your routine operation to establish credibility and will come in handy during the challenging times.

Manage the situation when fraud occurs:

  • The CEO and CFO should disclose issue to the Audit Committee of the Board of Directors.

  • Engage a forensic audit firm.

  • Engage your attorney.

  • Inform all members of the Board of Directors. Provide updates to Board regularly.

  • Engage a crisis communications firm to help create public messages for specific audiences.

  • Present findings from forensic investigation to County Attorney’s office.

  • Fully cooperate with legal authorities during investigation.

  • Inform your staff.

  • Inform the public. Coordinate activities with the media relations staff of the County Attorney’s office.

Telling the Public:
Since most organizations are involved with the public in some way, it is important to let them know what is going on. Below are steps to take in getting the media involved to accurately disclose the situation:

  • Work with a team of professionals as to how to go about letting the public know about the incident. This includes who all should be told and when to announce it.

  • Look at all possible scenarios that could be brought up during the process of public disclosure.

  • Make sure to tell the staff everything first before the media is told. Be direct and respectful to answer all questions received or point them to the appropriate communications staff.

  • Track and monitor all public responses.

  • Proactively alert the Attorney General’s office of the situation. Provide updates regularly.

  • Next, release the information to the media and allow interviews.

  • Reinforce the message publicly that this situation in no way reflects the work you do every day on behalf of those in your communities and it will not affect the quality of your programs and services.