Laura Otten, director of the Nonprofit Center at LaSalle University’s School of Business, recently posted a sad tale about a nonprofit board that neglected its financial oversight responsibilities over a period of many years, creating an environment in which an employee was able to embezzle almost three-quarters of a million dollars, and leading to a lawsuit by a former board member.
This nonprofit had sought help in understanding best practices and legal requirements, but every time they seemed to be making progress toward good governance, the work became too hard, and they fell back into their old ways. Otten writes, “Unfortunately, much of this story isn’t new to me, although not all end in the devastation of an organization and its mission. . . . [T]o make the needed changes is a lot of work . . . . Until something hits the fan in the form of a leak to the media, or a disgruntled staff member or, horrors of all horrors, one of our own — a fellow board member. And by then it is too late.”
Otten shares six lessons to be learned from this dysfunctional board, which you can read in her post. She concludes, “It’s no surprise that I am deeply saddened when I learn about such egregious betrayals of trust as that alleged against this former employee. But to know that her crime was preventable by having a board that did its job — a board that was clearly informed of its legal and ethical responsibilities but chose to ignore them — adds to the tragedy.”
Does your board to know its legal and ethical responsibilities? Does it uphold them?