Not-for-profit organizations face great challenges and often very little resources to address them. As stewards of their donors’ money, the reputational risk they face if fraud or malfeasance takes place is very high.
Our team was retained by a religious organization to examine their current expenditure policies. We found the board did not have sufficient financial literacy and they had a deeper concern towards the origin of the money, rather than how it was spent. This meant that the charity allowed their executive director to write cheques to a company he was related to.
We worked with them to change policies and procedures and to close the gap.
Not-for-profits are unique environments and often the culture of these organizations is one of the major draws to attracting and retaining talent; however, the lessons of corporate governance and fraud risk management apply to the not-for-profit sector as much as to any private business. There are certainly approaches that can be taken to help charities practice good governance, all while maintaining their important organizational culture.