I have a post at my other blog, Attestation Update, describing a speech by the former CFO of Enron that says all of the bad transactions that sent him to jail were approved by the attorneys, approved by the auditors, and approved by the board.
Yet Enron is the poster child for corporate fraud. A bunch of people went to jail for transactions that were fully reviewed and approved.
Here is the question that should unsettle all of us:
An actual conversation is going about how to use overhead ratios and what outcome measures might look like. Lots of writers out on the ‘net are involved.
Writers are actually engaging ideas from other writers. All of us working in the NPO community need this conversation to develop ideas on how to move away from the misuse of overhead ratios that has been going on for decades. I think this conversation is a good thing.
In addition, the feature articles by the Tampa Bay Times, Center for Investigative Reporting, and CNN on “America’s worst charities” is developing legs.
There are so many articles I’d like to discuss in my own post but time doesn’t allow doing so.
Soooo, I’ll start to aggregate a few of the more interesting articles.
My comments usually will be limited to one or three sentences.
Focus will be on two areas:
Here’s my first list:
Overhead ratio
The ranking approach used by the Tampa Bay Times in their “America’s Worst Charities” articles is focusing on the high fees paid to telemarketers rather than just the overhead ratio. One of the threads of the online discussions is that their methodology is just focused on overhead ratios.
That is not the case. The overhead ratio conversation is a separate issue. The Tampa Bay Times approach focuses on the high cost of telemarketing as a fundraising technique and the issues related to that industry.
The reporters outlined their approach in a separate article here.
As I looked at bits and pieces of the data, I noticed several of the charities had respectable program ratios, so I decided to poke at the data.
This is cool. The Franchise Tax Board has an online feature call the Entity Status Letter which allows you to quickly find whether an NPO is exempt with the state of California.
You can go to the Self Serve Entity Status Letter – Entity Search page. If the link breaks, just search “entity status letter” at the FTB website.
This will also work for a for-profit business.
When you find the organization, you can print a PDF file that says the organization is in good standing with the FTB and that they are exempt under 23701d.
Those of us who are accountants love pie charts. We think it makes complex info easy to understand.
For us as accountants that may be the case. Maybe not so much for others who aren’t as analytical.
The Worst Chart In The World, an article at Business Insider, explains why.
Time to find a new RSS reader if you’ve been using Google. I know a small group of people are reading this blog with that service. Time to find another one.
I looked at several and tried out a few. I’ve jumped to the Old Reader.
Not quite like Google’s, but it is working fine.
It is very easy to export a file containing a list of your subscriptions. Also easy to import that into most readers. But do that before June 30.
If you read this blog, you have probably already heard of the combined efforts of Wise Giving Alliance, GuideStar and Charity Navigator to take on the “Overhead Myth”. They join a long list of voices criticizing the overuse of overhead ratios.
New Voices
Robert Anglen has a report in the Arizona Republic on a Mesa charity tied to inquiry. He had an interview with the CEO of the Breast Cancer Society.
The CEO says that what appeared to be an effort to vote CNN the number 1 network was a failed attempt to wave goodbye to the reporters while simultaneously holding a cell phone.
Far more serious is the discussion of variance power.
(Cross-post from my other blog, Attestation Update, with minor changes.)
“Going to meet your Maker with the fresh scent of theft on your hands is not a good way to go…”
is how Charles Hall starts his story of a long ago fraud – Stealing While Dying.
You have heard of the situation where the bookkeeper does the main bookkeeping, receives the bank statements, reconciles the accounts, and is an authorized check signer. Perhaps you recognize that from someplace you’ve worked.
In this situation, the most-honest-and-nicest-person-you’ll-ever-meet bookkeeper starting stealing lots of money when she became gravely ill.
Price reduced to only $0.99, now available here.
“Tragedy of Fraud – The Ripple Effects from Fraud and the Wages Earned” describes the tragic consequences from fraud.
There are ripple effects that spread out to harm innocent bystanders. The perpetrator draws a wide range of well-deserved wages that will be paid in full.
The book looks at two fraud incidents to learn what happens after a fraud is discovered. One took place in a local megachurch and the other in the mayor’s office of a small city.
This book is a compilation of blogs posts that have been previously published at Nonprofit Update and Attestation Update. The posts have been edited slightly and reorganized for easier reading.
Major sections of the book:
The other book I have available at Amazon is Once Upon Internal Control.
Big news: The Attorneys General are taking depositions.
The third part of Tampa Bay Times series on “America’s Worst Charities” discusses a group of five NPOs that are run by family members. Four of them are reportedly formed by or facilitated by the founder of the oldest charity in the group.
A report aired last night on CNN’s AC:360.
AG involvement
Near the end of the Tampa Bay article is this comment: (more…)
“Lack of regulation and meager penalties allow worst charities to thrive” is the second part of an ongoing series from the Tampa Bay Times and Center for Investigative Reporting. Part 3 expected in a week.
If I were to summarize a several thousand word article, the main point would likely be the patchwork of federal and state regulatory structure has a difficult time chasing bad players out of the telemarketing business.
(Cross-post from my other blog, Attestation Update.)
That’s the question raised by Seth Godin in his 5000th post.
All knowledge workers have something worth sharing.
Mr. Godin’s biggest surprise after 11 years of blogging?
That more people aren’t doing this. Not just every college professor (particularly those in the humanities and business), but everyone hoping to shape opinions or spread ideas. Entrepreneurs. Senior VPs. People who work in non-profits. Frustrated poets and unknown musicians… Don’t do it because it’s your job, do it because you can.
Audit CPAs – 
(more…)
The title of the series is “America’s Worst Charities.” This is a collaborative effort from the Tampa Bay Times, the Center for Investigative Reporting, and CNN.
Don’t know how many words are in the first report, but it took fifteen clicks to page down the article on my monitor.
The report accumulates a list of what is labeled the 50 worst charities in the U.S.
If you ever check in with my blog, you will definitely want to read the Tampa Bay Times reports in detail.
Here’s some links for you: (more…)
Moving to outcome measures won’t make things perfect in terms of evaluating charities.
There are some downsides to consider, as mentioned by Nonprofit Quarterly – Want Charities to be Evaluated Based on Impact? Be Careful What You Wish For.
The article raises three concerns, all of which we need to think about very carefully. I will mention the three issues and comment on each.
First, (more…)