The Death of a Nonprofit - Kids Care in Houston TX – But Why Did It Die?

This is the story of the death of a nonprofit, Kids Care in Houston TX. Kids Care received extensive national notice, significant support, a high-profile board and national and international awards and recognition. Carol and Hurt Porter, Jr. started Kids Care in their kitchen in 1984. It grew to feeding 20, 000 people a month in the first Meals on Wheels program for hungry children The Porters branched out to provide health care and provide cultural-enrichment programs for inner-city kids. Whole families were being fed. Carol Porter was called the “Mother Teresa of Houston”. Carol spoke before the United Nations about her work as a nongovernmental organization. In 2002, however, extreme news coverage from a Houston television reporter Wayne Dolcefino on the local ABC affiliate changed everything. Dolcafino wrote 40 articles in the series. He won an Edward R. Murrow and an Emmy for his Kid Care series. The allegations included personal use of corporate credit cards, the ownership of a new car, funds spent on hair care, Italian tile for their home, unpaid taxes, expensive restaurants, hotels and a strip club – and more. But what is this story truly about?

Is this a story about

• nonprofit theft, corruption and embezzlement;

• a story of gross mismanagement;

• the failure of an influential board’s oversight;

• really bad business practices;

• a case of high performance and poorly designed structure to maintain itself;

• an overreaching mission that grew beyond the ability of its creators, staff and board;

• poor public relations;

• straight out-and-out racism;

• the story of a muck-raking self-serving reporter;

• an over-aggressive Attorney General;

• a misinformed Internal Revenue Service?

Whatever your conclusion, the fact is Kids Care died. But why?

Killing Kid Care - Carol and Hurt Porter Jr. ran a well-connected, million-dollar "model charity" in Houston—until it all came crashing down By David Theis September 18, 2009 AllBusiness

On a recent Saturday afternoon, a group of parishioners from Berean Adventist Church on Houston's near East Side gathered to fill grocery bags with donated food. It was part of a weekly post-church ritual organized by the Porters- Carol and Hurt Jr. The Porters round up donations from grocery stores and bring the fruits and vegetables to be sorted, bagged and delivered to the neighborhood's numerous elderly and shut-in residents.

As the group counted out how many bananas, mangoes and yams should go into each bag, Carol and Hurt were lively and engaged. Carol, who's 64, is a talker anyway, a dynamo of a woman. Hurt Jr. (he and his father were named Hurt because of the pain their mothers suffered during childbirth), who's 67, was noticeably more voluble here than at home, where his quiet demeanor perhaps shows the effects of the Job-like trial the Porters have lived through for most of this decade.

Until 2002, the Porters headed a nationally prominent charity, Kid Care. Started in the kitchen of their modest northside house in 1984, Kid Care had grown spectacularly, feeding more than 20,000 a month in the nation's first Meals on Wheels program for hungry children. As donations came in, the program had branched out into delivering health care and providing cultural-enrichment programs for inner-city kids.

Kid Care became well-known in short order. It was named as one of Bush 41's "Thousand Points of Light"- No. 866. Carol, a lifelong Republican, stood behind Bush 43 in the Oval Office when he signed the Faith-Based Initiatives Act. Kid Care had gone international, recognized as an NGO by the United Nations, where Carol had spoken. Carol was an ABC News "Person of the Week." Her face, along with those of needy children, adorned billboards all around Houston. A New York Times article called her "the Mother Teresa of Houston."

(Snip)

Then disaster struck, in the form of muck-raking Houston television reporter Wayne Dolcefino. In September 2002, on the local ABC affiliate, Dolcefino produced the first in a series investigating how Kid Care spent its money. He found plenty that was suspicious: money apparently spent on the Porters themselves - on fancy meals and hair salons, on personal property taxes, on friends and relatives and, as the nail in the coffin, on strip-club outings.
As Dolcefino's series ended, the Porters were sued by Texas Attorney General Greg Abbott. The AG's office shut down Kid Care and ordered another charity for children opened (without the Porters' involvement) in its place. The IRS joined in, claiming the Porters owed $550,000 for unreported income.

(Snip)

How had a "model charity" fallen so far, so fast? Were the Porters victims of a sensationalistic, ratings-hungry reporter and an attorney general who too readily accepted his reports as fact? Had their impatience with "bean-counting" and sound business practices doomed them when Kid Care went from a self-funded mom-and-pop charity to one with a $1 million budget and 15 employees? Was Kid Care poorly served by a board of directors who didn't exercise enough oversight? Or were the Porters brought down by the size of their ambitions for Kid Care - to not just feed hungry kids, but draw them out of the cycle of poverty?

The answer, in all cases, is yes.

(Snip)

At a 2002 board meeting, held after Dolcefino's series had begun to air, the board and the Porters discussed Kid Care's problematic "crisis intervention" program. Money tended to be spent wherever Kid Care staff saw a pressing need - whether it was a one-time school uniform purchase for a needy kid, a birthday party for a Kid Care volunteer who'd never had one before, or private-school tuition for a former Enron employee's child. "Crisis intervention" was a loosely used term, and it allowed Dolcefino to portray it as a way for the Porters to hand out money according to their personal whims.

(For the full engrossing story about a great nonprofit vanishing from the face of the earth in a very short period of time read on. Could it happen to you?)

http://www.allbusiness.com/government/government-bodies-offices/13144761-1.html

RESOURCES

Kid Care, Carol Porter, Wayne Dolcefino - The Kid Care story fizzles to a finish As told to Richard Connelly Published on December 11, 2007 The Houston News

http://www.houstonpress.com/2007-12-13/news/kid-care-carol-porter-wayne-dolcefino-weighing-marijuana-and-stopping-on-red/

Fed Up With Hunger from Life on Purpose, Undated

http://www.lifeonpurpose.com/index.php?task=more-info&page=66&websectionid=198

P.S. I’m sorry Published 20.DEC.07 Article from the Jewish Herald-Voice

http://kidcareinc.org/id18.html

'Mother Teresa of Houston' Fights Hunger and Government Aid by Sam Howe Verhovek, Published: Monday, February 6, 1995 New York Times

http://www.nytimes.com/1995/02/06/us/mother-teresa-of-houston-fights-hunger-and-government-aid.html?pagewanted=all

Better Business Bureau Suspends Membership of Kid-Care Charity. Article from: September 6, 2002 Knight Ridder/Tribune Business News Article date:

http://www.highbeam.com/doc/1G1-91161024.html

The Stories of Nonprofits Dying

http://dongriesmannsnonprofitblog.blogspot.com/2009/08/stories-of-nonprofits-dying.html

Nonprofit Theft – “A Few Bad Apples” or the Invisible Reality?

http://dongriesmannsnonprofitblog.blogspot.com/2009/09/nonprofit-theft-few-bad-apples-or.html

Responses to Article “Nonprofit Theft – ‘A Few Bad Apples’ or the Invisible Reality?”

http://dongriesmannsnonprofitblog.blogspot.com/2009/10/responses-to-article-nonprofit-theft.html

Responses to Article “Nonprofit Theft – ‘A Few Bad Apples’ or the Invisible Reality?”

On September 24, 2009 I published an article on this blog entitled Nonprofit Theft – “A Few Bad Apples” or the Invisible Reality? . I also posted it on a number of social media webs sites. There has been significant discussion about the article and its contents particular at LinkedIn. LinkedIn has a number of discussion groups concerning various nonprofit issues. The discussions have been in five LinkedIn groups. It has also been mentioned in Facebook. This is a compilation of all discussions to be located in one place by groups in chronological order. I am surprised and elated by the responses and the elevation of the discussion about crime in nonprofits, theft of funds, embezzlement, corruption, fraud, health/safety violations and misconduct. I will not repeat anything from the previous article – it can be read at http://dongriesmannsnonprofitblog.blogspot.com/2009/09/nonprofit-theft-few-bad-apples-or.html Thank you all very much for sharing your time and thoughts – and please keep them coming

The discussion continues at LinkedIn and I will add them as they appear. There is a new comment under BoardSource. I have also added a comment published at this blog site to the original article.

Authors names follow the comments.

Comment to first article

Chris Gelken said... An incredible piece of work - sad and sobering as it may be. Well done.

The LinkedIn groups are –

BoardSource

Non Profit Network - MojaLink

Nonprofit Professionals Forum

Non-Profit and Charity Network

Nonprofit Governance Group

BoardSource

I think one of the fundamental controls weaknesses in non-profits is that people who are well intentioned supporters of a cause just don't expect other members of the cause to act against its interest. That lack of a 'presumption of risk' can lead to a lack of proper structures and controls for managing the risks.

Another problem is the issue of personal 'sense of entitlement' where an individual feels that because he or she has done unpaid work they are somehow entitled to an informal benefit. These people just don't recognise theft as theft!

For both problems the solution lies in good risk management, an ethical and skilled board of directors that effectively leads and supervises a strong management team. Up to date accounts, cash management and thorough reporting all assist.

Julie Garland McLellan

ACORN has been a subject of investigative reporting since at least the mid-1980s. I remember when the "Dallas Observer," the alternative newspaper in Dallas, TX (and DEFINITELY NOT right-wing or conservative! ) did an extended expose of ACORN's activities in Dallas.

I think the 13% number is inflated because the total GDP of the nonprofit sector is over $1 trillion. Embezzled and wasted funds come from all sources, not just from donors' annual contributions. The 4% figure is not only more realistic, it also more closely tracks the percentages in other industries and other endeavors.

This does not excuse crimes committed by people affiliated with nonprofit enterprise. My point is that we are not exceptional.

It's also important to remember how severely fragmented the nonprofit economy really is. It's a pyramid with a very wide base and a very small cap. The issues of lack of financial controls, lack of accountability, etc., in nonprofits are similar to those in small business in for-profit and governmental entities.

Nonprofits are also experiencing increased press attention for their problems for several reasons. We're hearing more about it because more people - including the press - are talking about it more than in the past.

It's important to remember that for-profit businesses have traditionally been very reluctant to disclose similar issues, for fear of a loss of consumer/lender/regulatory confidence. It's still not uncommon for for-profit employee/malefactors to be quietly dismissed rather than prosecuted or sued.

Nonprofits, like for-profits, place unwarranted reliance on financial audits as a defense against financial crimes and malfeasance. Financial audits are NOT designed to uncover fraud or embezzlement, though they may happen to discover such activity. Audits are designed to sample the organization's financial records and test them for adherence to GAAP (soon to be superseded by international accounting standards). In other words, an audit demonstrates that some transactions are appropriately recorded and, in effect, the books cross-foot. From this, one can conclude that either the records as a whole are appropriate, or that whoever is cooking the books is doing so with some talent.

Since most nonprofits have insufficient budgets for annual financial audits, much less the budget or justification for a forensic (operational) audit, much malfeasance goes undiscovered for some time. Hence, when inappropriate activity is finally discovered, it has been going on for some time and significant amounts of money are often involved.

Michael Wyland

Hi, Michael. As always you have added value to the discussion, this time about "bad apples". I do think that at whatever percentage, 13% or 4% or something in between, we are exceptional. We operate with a public duty and a public trust with public money.

We should be expected to be cleaner than business and government. We should be under greater scrutiny, held to a higher standard and should have less scandal, not about the same as other entities. Do we have an obligation to police ourselves? We know the banks could not do it. We know that Wall Street could not do it. I doubt we can either. Are we prepared to put our dirty little secret out there and have others police the sector?

I think nonprofit leaders do not like to talk about theft of funds, embezzlement, corruption, fraud, health/safety violations and misconduct. And I think that most nonprofit leaders know of at least one nonprofit that has experienced theft or embezzlement or one leader who has padded an expense account or has committed another crime. I know that over the years I have been aware of too many in legal services and other programs, most of whom were convicted.

Donald Griesmann

Great discussion points.

I am aware of several non-profits that have quietly 'released' staff from their employment contracts after finding that they were embezzlers. One of them was told by the police that, as it wasn't over $50,000, they weren't really interested in prosecuting. It is hard to get a prosecution as you usually destroy the evidence when you are busy discovering it.

The others all wanted to avoid scandal so did not consider going to the police.

In one instance the staff member who had embezzled (consistently and deliberately whilst fraudulently reporting to the board) had the cheek to ask for a reference and to threaten legal action if it was not good as she 'had performed well on all duties' and as it was 'in nobodies interest for reputations to be damaged by airing disagreements.' The reference stated that she was dismissed for gross misconduct after admitting to theft of company monies. No legal action was taken either by the ex-employee or the organisation that received the reference. Our legal advice was that it wasn't defamatory as we could prove it was true but that we should just decline to give a reference and say it was company policy.

I agree with Don - this sector is too important to allow people to get away with behaviours that are just plain wrong. We need to set ourselves the highest standards and see if commercial and government boards will aspire to follow our lead!

Julie Garland McLellan

Don:

Personally, I don't believe that one sector has a greater responsibility than any other for following the law and upholding ethical principles. I agree that the public, donors, regulators, and the media place greater emphasis on some sectors on others depending upon fashion and whatever's currently in the news.

I also am not sure that I agree with your assertion that the nonprofit sector has a special responsibility by virtue of its using so-called public money. Nonprofits are no different from any other type of business enterprise in that their business expenses are deductible and that their revenues (e.g., donations) are business (i.e., mission-related) income. It's true that most nonprofits enjoy exemption from many local, state, and federal taxes. However this is a quid pro quo for the recognized role of nonprofit organizations in helping government, or in other words the public, meet well-defined public goals. Nonprofit organizations, under the law, are by definition private businesses that operate differently (primarily in the areas of the use of revenue over expense and in the ownership of corporate assets) from for-profit corporations, but, nonetheless, are corporations under the laws of their states.

Those who advocate stronger regulation of nonprofits generally look in one of three directions. The first direction is towards the Internal Revenue Service. The new form 990 includes a series of questions on governance and so-called best practice for nonprofit operation that are largely unrelated to the financial reporting which has been the traditional purpose of the form. However, the IRS has testified to Congress that it does not have the resources and does not at this point have the interest in regulating the governance of nonprofit organizations. The second place the decided is state attorneys general. All states have varying levels of regulation on nonprofit organizations, beginning with their nonprofit corporation statutes. In addition, many states require things such as a charitable solicitation registration, filing of annual reports (sometimes a form 990 is sufficient for this purpose), and payment of annual registration fees of various types.

Recognizing that both the IRS and the states may not have the capacity and knowledge necessary to impose additional regulation on nonprofits, some have recommended the establishment of a nonprofit regulatory body similar to the Securities and Exchange Commission. Such a national nonprofit regulatory body might be given authority to issue regulations, require compliance with new standards, and even be given investigatory power over nonprofit corporations. It's important to note, however, that miss seasons, malfeasance, and nonfeasance occur in the for-profit and governmental sectors now even with the structures in place.

While we can hope for a crime free world, reality says that most people are honest. A few are determined to be dishonest, and most of us are ethically challenged from time to time. Honesty is usually its own reward, those determined to be dishonest required the intervention of the criminal justice system, and ethical structures need to be put in place to assist those of us who are ethically challenged from time to time. Of course, many of those ethical structures are ready in place in the form of the various nonprofit societies and fundraising professional societies that already exist to serve our sector. There is strong agreement among these various organizations as to what constitutes ethical and unethical behavior, particularly as it involves the handling of finances.

Michael Wyland

To me, the larger problem in nonprofit misfeasance, malfeasance, and nonfeasance is the inability or unwillingness of a nonprofit organization to pursue its mission related objectives in an efficient and effective manner. Unfortunately, most of the lack of efficiency and effectiveness are unrelated to the propriety with which the finances are handled. Regulators focusing on financials neglect whether the organization is actually accomplishing any social good.

The IRS believes that nonprofit organizations that follow good governance best practices are less likely to have criminal other deficiencies in their operations. Of course, assuring good governance practices is not guaranteed that organizations are being run appropriately, much less effectively and efficiently. In the same way, it is assumed that by focusing on finances, regulators will assure the public that nonprofit organizations, and the donations that fund them, are well used. Of course, the absence of criminal activity does not guarantee efficiency and effectiveness of an organization.

Michael Wyland

Great discussion. This is a common topic that Board members and CEOs of nonprofits often talk about in our Masterclasses, and two key points always drop out:

1. There is no such thing as a small fraud-it is only a fraud that has not had time to grow...

2. The single biggest determiner of fraud in a nonprofit is when someone has not had 2 or more weeks, in a block, away from their desk on holidays or some other sort of leave.

Lisa Bundesen does a great blog on Fraud in nonprofits, found at

http://www.lisabundesen.com/page1.aspx

Steve Bowman

Maybe the sector doesn't have any special obligations to act ethically - one colleague with whom I have had a similar conversation argued that there should be one, high standard, not some special standard just for nonprofits. Maybe it isn't an obligation, but wouldn't it be compelling if we SET the standard instead of falling into some "average behavior" range? If the sector, as a whole, stood up with one unified voice and said "we want to be the leaders in how corporations can behave ethically" rather than "we have no more or no fewer ethical breaches than our neighbors"? My kids have no obligation to be more respectful, more empathetic, or more giving than any of our neighbors - but by G*D I will do everything in my power to ensure they are leading the curve, not doing "ok" compared to others. I expect nothing less from my nonprofit clients.

Emily Hall

Emily: I agree with your passion and resolve. My only point would be that we are all human, and that the best of us fail to be excellent and exemplary all the time. My point was not that we should settle, but, rather, that we should not beat ourselves up for failing to be perfect, set ourselves up for failure by seeking to impose an unrealistic standard on our sector, and that we not raise the expectations of the general public based on an unreasonable standard we set for those in our sector.

Through law, regulation, and professional societies, we already have significant standards of conduct and practice set upon us. The media, donors and other stakeholders, the people we serve, etc., seek to hold us to those standards and chastise us when we fail to meet them.

The answer isn't more standards, but more adherence, enforcement, and understanding of the standards that already exist.

Michael Wyland

Julie Garland McLellan's first post, for me, opens up the underlying issue - especially with charter schools. US Secretary of Education Arne Duncan said that charter schools, which are nonprofits, have exposed themselves to substantial risk by allowing "second and third rate" schools to continue operating. He called on those within the charter realm to begin "cleaning house" of those that should not be in operation.

When funds go awry, those nonprofits are quick to point out how "important" or "worthy" their cause is and what they are doing for children. the prevailing assumption is an admission (sometimes) of wrongdoing but that their good work will outweigh the bad choices made. However, when you are taxpayer funded, you accept public accountability.

I did a training last week for charter developer groups that may be writing charter applications in this state. I told them very clearly the following: 'if your school is closed, it has nothing to do with the children or your cause but everything to do with poor choices made by the adults in charge." For instance, if the school misappropriates money, who did it? If the school does not deliver on the results promised in the charter, who taught the students? If the school does not turn in reports, who is to blame? This goes back to a belief whose origin I really do not know where to find -- being "sorry" means that I am absolved of consequences for my actions.

I am excited to be a part of this group and hope to learn a great deal that I can then pass on to my schools.

Joel Medley

· Non Profit Network - MojaLink

Trust should always be an earned commodity, one that requires constant topping up. But this alone should not entitle NFP's to a low rate of fiscal abuse. Accountability Transparency and Accessibility MUST be managed to provide the most secure base for continuance.
This unfortunately must also include the prosecution of those who break faith.

Rick Relf

I don't think being a nonprofit should mean throwing out common business sense. Like any entity, certain precautions should be put into place to ensure these things happen less often. You trust those who have earned it, I certainly agree with that. But beyond that, even with the earned trust, there should be precautions.

Judy Anne Cavey

I agree that those who break the trust and steal from their organizations should be prosecuted. Hopefully, it would be a deterrent, although some people are so confident that no one will catch them that it may not help. But, for others, I think it would.

In any case, there certainly SHOULD be precautions, such as clear policies that are consistently followed and checks and balances.

Kayza Kleinman

Hi Donald,

If those who donate, showed a little more interest and got involved, whether by volunteering time and doing ground level work or by serving on boards of non-profits, there would be greater checks. Personally I think, there are only a handful of bad apples in the NPO sector, most of us participate in a big or small way because we do want to contribute.

Best,

Lubna

http://writerscyberslate.blogspot.com

Lubna Kably

· Nonprofit Professionals Forum

Don,

Excellent observation! A few years back over 40% of the general public thinks that charities are neither honest nor ethical in the use of money. That's also why many younger donors today do not trust the nonprofit inst. Instead they want hands-on involvements. They want to see impact measurement.
Many nonprofits are ill-equipped to meet their demand entrenched in the old way of doing business.

Don, back to your point--board independence and strong governance are the answers. Unfortunately nonprofit boards are not always well informed about their responsibilities and liabilities. In all organizations I have served, check signing and payment authorization policy is enforced and audited.

I think if nonprofit boards and auditors are legally liable, you will find improvements in nonprofit accountability.

Richard Wong

I think that your article makes some good points. However, I think that there are some issues with your data. Firstly, it's important to realize that the deluge of news reports does not necessarily reflect reality. For instance, I have seen headlines where the Feds alleged that certain non-profits were simply shams that existed to launder money. While I don't know if the money laundering really happened or not, I do know that at least one of the organizations mentioned by name is genuine and does a good deal of service within its community. In other words, the fact that something is in the headlines does not mean that that is the reality.

You also mentioned studies that claim that a huge percentage of non-profits have major issues with ethical / legal handling of money. I'd love to know these studies reached such conclusions. While it's true that too many organizations don't have the governance they should, that does not necessarily actually translate into funds being stolen.

My experience simply does not match those claims. I've worked with dozens of organizations over the years, and my program has actually worked with approximately 850 of them - most fairly closely. You quickly get a good sense of what is going on with a place. We have had some cases where money was clearly not going where it was supposed to - sometimes mis-allocated to the wrong program (bad enough) and others simply going into private pockets, but very, very few. In a few more (again, very few) we've had our suspicions, but no proof. (Most of our people, especially the fiscal ones, have a very sharp nose for these types of issues.)

So, yes, I know perfectly well that the bad apples exist. On the other hand, I am sure that it's not anywhere near as widespread as it sometimes seems.

I will add that I agree good governance, and strong, involved (but not micromanaging) and educate boards are essential. So is transparency. But, I think that as long as some of the rules and regulations that non-profits operate under remain as convoluted, balkanized and arbitrary as they are, that is going to be very hard to accomplish.

Kayza Kleinman

Stanford did a good review. I would like to share this with you.

http://www.ssireview.org/site/printer/ethics_and_nonprofits/

Richard Wong

Excellent review. I think that they make some very valuable points. The discussion of distortion of decisionmaking due to inappropriate measures and the linked issue of over-emphasis on low overhead, is excellent. And, I wanted to cheer when I read the item, small as it was, about standardizing accounting practices. I think that this is something that is way, way overdue.

The main question this article raises is how we define ethical vs unethical. While some of the examples raised were clearly unethical, others were more a matter of perception than real ethical concerns. And, some, as noted are a matter of unclear - sometimes unrealistic - expectations.

In some cases, however, I question whether the actions described are truly unethical, given the situations they are responding to. For instance, in the face of regulations that are not reality based (eg unreasonable caps on overhead, arbitrary classifications of expenses or inappropriate limitations on appropriate expenses) and which actually may be counter to the aims of the funder, is it really unethical to use "aggressive accounting tactics"?

Of course, even if we were to agree that this is not unethical, it does raise some serious concerns, because it does distort the decision making process, makes the audit trail more murky, accustoms people to figuring out how to get around the rules, and certainly lessens the transparency that we agree is necessary. The problem is that sometimes even when organizations manage to avoid those ethical questions, the byzantine requirements of different funders can have all of the side effects mentioned (except perhaps for getting people into the habit of bending the rules.)

I think that the answer to this particular dilemma is fairly simple (although not so easy). What needs to happen is for reasonable, reality-based standards to be implemented, so that organizations have no need or reason to use practices that obfuscate the process of allocation of resources. I think that everyone will "win" in such a scenario.

Kayza Kleinman

· Non-Profit and Charity Network

Thank you for sharing this.

Chris Gelken

Your two rules are dead on, Donald. We've never compared notes before, but I promote both in workshops and have for many years.

However, I add a third:

"Put good financial controls in place while trustworthy people are in office. It's part of your legacy, and it's too late once there are issues of trust."

It's important for the current treasurer, CFO, etc. to understand that new controls are not a reflection on them but a risk management process for the future when others will hold their offices.

And yes, the new controls may reveal that the current people aren't as worthy of trust as we thought, but that is rare. The many abuses are very real, but the majority of nonprofit volunteers and staff are honest and doing their best.

Jane Garthson

· Nonprofit Governance Group

Great article! I'd add that we have a tendency to want to give people a chance to make things right. We offer the option that we'll keep things quiet if they pay the money back on a defined schedule. However, this opens us up to charges of collusion and/or blackmail. We need to report all incidents to our insurance companies and the police. Let the experts handle it!

Terrie Temkin

· Start-Up Non-Profits

I do agree with what you say’

Unfortunately this happens in all businesses across the world. Non-Profit Foundations do have that loop-hole to get away with more than others, for some reason they have not and are not questioned?
I have had my non profit for fourteen years, it's rather small, but I have kept it that way. It does what it is supposed to do with me at the head of the realm.

I do see a lot of foundations going by the way side and the present time, I hope we do not lose the good ones. Life is life, the good, bad and the ugly.

I have a new book out. "Joyful Volunteering" read more about it at: www.kidstalk.org

Ninon de Vere De Rosa

• Facebook

Valerie A. Nelson Interesting and sad article, Don.

Pamela Grow likes your note Nonprofit Theft – “A Few Bad Apples” or the Invisible Reality?

OTHER COMMENTS

Thank you, that was an incredible article and so important in these times. It is true that one bad apple can spoil the tree and stewardship of donors dollars requires scrupulous ( word?) transparent measures and accountability. kudos on the time and work you must have spent getting that together to share,

Kelly Hutchinson

Donald, really enjoyed your article. I've been tracking embezzlement at non-profits in the Richmond Va. area for the last couple years and have been astonished at the amout reported $2.4 million reported in the paper.

That number has got to be significantly smaller than the actual loss, as I bet most are not caught, and of the ones that are caught only a fraction are charged, then a smaller number make it to court and are then reported.

Do you think most non-profit managers and board members realize how much of this theft is going on?

Thanks for sharing all this information its really amazing what's going on.

Also, I grew up in Amherst, went to Canisius High, St. Bona and Canisius College. Really miss Buffalo !

Dan Healy

I work in the security department of IT. Every once in awhile I will help out with the IT security side of non-profits. And yes, it is sad to say, that crime and theft runs very high in non-profits. Great people who start these charities are carelessly trusting people to get there cause out and in return the people who they trust to support their causes, and yes even bookkeepers, are stealing right underneath their feet. Since a lot of charities work with cash donations, it is hard to track the funds if not monitored carefully.

Ya'll have a good day.

James Henderson

Your blog entry makes a great read. I have a Fraud in NFPs blog which I update weekly with small tips on fraud prevention, detection and investigaiton for NFPs. If you would like to contribute at any time, I would appreciate your input. My website is www.lisabundesen.com and my blog is www.lisabundesen.blogspot.com. I turn the blog post each week into a weekly Fraud in NFPs newsletter.

Again if you would like to contribute articles, they are always welcome and if any of my posts are useful to you please feel free to use them.

Also on my website you will find the 2006 and 2008 BDO NFP Fraud Surveys which I authored before leaving BDO in May this year to join PPB.

Hope to hear from you.

Lisa Bundesen

• Comment from previous blog
  

Don,

Just caught up with your posting. Thanks for acknowledging the NYT article that scratches the surface of an ever-growing, yet denied, $40 billion problem facing the charitable sector. I too give frequent updates on this insidious issue at Nonprofit Imperative, an twice monthly e-newsletter. Unless this problem is addressed, it with consume all of the good will that the sector currently enjoys.

Keep up the good work. There can't be too many venues in seeking a solution.

Gary Snyder
gary.r.snyder@gmail.com

http://nonprofitimperative.blogspot.com/

End of comments.

What do you think? Is there an ethical and moral issue about nonprofits being held to higher standards than government and the private sector? Is crime in nonprofits just a few bad apples or more insidious? Will appropriate, efficient and effective policies, procedures, forms, recordkeeping and retrieval systems help? How often have they appeared to be aspirational and not operational? How does it appear in the nonprofit(s) with which you are associated (but not necessarily working for today)?