When nonprofit organizations are in the news headlines for the wrong reasons, it can weigh heavily on a community, board members, staff and donors.
The United Way of Staunton, Augusta County and Waynesboro recently shut down, and an investigation is taking place into some financial transactions allegedly made by the former executive director.
The Staunton-Augusta-Waynesboro Habitat for Humanity survived but faced its own setbacks in 2024 with its executive director stepping down, and while not under law-enforcement investigation, sources indicate there was a severe lack of financial oversight for years.
These two organizations are certainly not alone.
In recent years, both nonprofit organizations and for-profit businesses throughout the state have faced embezzlement or other financial improprieties by employees.
The Frontier Culture Museum, Wildlife Center of Virginia, Staunton Farmers’ Market, Waynesboro Elks Lodge, A.R. Ware Elementary School’s Parent-Teacher Association, Lynchburg Progressive Firefighters Association and R.E. Lee High School have dealt with embezzlement issues often from people who served in a position of trust as an executive director or bookkeeper.
The Harrisonburg-Rockingham Community Services Board, DuPont Community Credit Union, Virginia Department of Health Office of Emergency Medical Services, Virginia Alcoholic Beverage Control, law firms, home health care and retailers all have been in the news for employees who were suspected of some kind of financial fraud.
The Habitat series
This article is the final installment of a three-part series. Links to the first two parts of the series are below.
- Part one: A tumultuous year for Habitat ends on a positive note (Jan. 8, 2025)
- Part two: Habitat’s work continues, its plans for the future (Jan. 9, 2025)
- Part three: What we can all learn from Habitat, United Way
United Way, Habitat issues should serve as ‘wake-up call’ for nonprofit boards
The Community Foundation of the Central Blue Ridge works regularly with those who give to organizations and causes and the recipients, so it’s no surprise that when a nonprofit faces a financial crisis, it hits home.
“It’s obviously something I’ve been thinking about a lot since everything that has occurred with a couple of nonprofits in hope that it would be a good wake-up call for most nonprofit boards to be asking, What’s our legal responsibility, and how do we ensure that things like that don’t happen with our organizations,” said Dan Layman, CEO and president of CFCBR.
The charitable organization distributes more than $2 million in grants, scholarships and awards each year in cities of Staunton and Waynesboro and the counties of Augusta, Highland and Nelson.
“With the cases that came up, particularly with the United Way, it gave us some pause to think about what within governance that we offer in the form of trainings this coming year and moving forward and making sure that we’re including the things where board members who are unsure of what their role is as a board member, or unsure of are they asking the right questions, to make sure that the organization that they’re serving doesn’t fall on these kinds of times,” Layman said.
CFCBR regularly brings in experts from the Charlottesville-based Center for Nonprofit Excellence to offer guidance to the more than 200 nonprofits in the region. Layman said most of the CNE workshops focus on board governance and fundraising. Outside of the workshops, CNE and its team of experts provide assistance to nonprofits throughout Virginia, meaning no matter how small or large, organizations do not have to face challenges on their own.
“We truly believe by investing in nonprofits and helping make them stronger and helping folks be educated around what it means to serve on boards, what it means to staff a nonprofit, we truly believe that that means we’re strengthening our communities all throughout the Commonwealth,” said Mariane Asad Doyle, executive director of CNE.
Legal responsibilities of board members ‘may not be sexy’
With hundreds of nonprofits in the region, there is a need for potentially thousands of people to step up and offer their time and expertise to organizations as a board member.
When things are going well for a nonprofit, the role of a board member might seem easy.
In tough times like Habitat for Humanity and United Way have faced, board members are forced to deal with heavy decisions, including possible malfeasance or the need to shutter operations entirely. When it gets hard, Layman said, the role of a board member is more important than ever.
After the exit of Habitat’s executive director, the board shrunk to only five members. Ideally, they should be at seven to 12 members, their executive director conceded. Some board members left when their terms expired; others resigned for reasons including frustration over the lack of consequences for the director.
“Quitting the board at that point, getting all the people who are questioning what’s going on leaving the board, doesn’t help,” Layman said. “It just leaves the folks who are on the board who weren’t willing to question what was going on.”
Layman said that those joining a board should go in with their “eyes wide open.”
His advice for anyone on a board or considering joining a board is that even when they are drawn to the organization because of its mission or “think it would be an enjoyable use of their time and a good way to potentially meet other people, that when they join a board, they have a legal responsibility, and those legal responsibilities may not be sexy at times. They’re not going to be fun, but that is inherent to their role as a board member for that organization. They just need to go into those opportunities with their eyes wide open and an understanding of what those responsibilities are.”
Board members do have a fiduciary responsibility to review and approve budgets that are appropriate to the organization and that are realistic and to review financial reports on a routine basis.
“Ultimately, they’re [board members] the legal trustees of the assets of the organization, so there’s all that oversight built into their legal responsibilities that I don’t think get talked about often enough within board meetings and as new board members are brought on,” Layman said.
It can be even more challenging for organizations that are all-volunteer, have one or two staff members or have very small boards.
“It leaves room for things to fall between the cracks,” Layman said.
Understanding the numbers even when you aren’t a CPA
Regardless of the size of the organization, it’s key that a thorough set of policies and procedures are in place, especially when it comes to handling donations and expenditures, anything to do with money, and that there is a means to ensuring the organization remains in compliance.
“It’s one thing to have it on paper,” Layman said. “It’s another thing to practice it and monitor it.”
The CFCBR board doesn’t spend a lot of time during meetings going over financial reports, Layman told AFP. However, the Community Foundation has an outside accountant reviewing financials on a monthly basis; most nonprofits aren’t going to have the same oversight measures in place.
“If someone’s on the board, and they’re not comfortable with their knowledge of interpreting the financial statements, they’re not going to be the ones who ask questions, and I think that’s a culture that all boards should reconsider and create a comfortable space for all board members to ask questions and make sure they know there are no dumb questions.
“If they see something they don’t understand, raise their hand, ask the question, get it answered.”
Doyle agrees with Layman. She said board members should think about their own households and questions they have there to guide them on financial matters on a board.
“Ask questions,” Doyle said. “It’s no different than running your own personal finances or governing your own household, or if you’re in a business or working for a corporation, thinking through what makes it sound, what makes it sustainable?
“Those are the same kinds of questions we should be asking at nonprofits. I’m pretty well known for saying that nonprofits are indeed small businesses.”
She said when she serves on a board, it doesn’t matter that she’s not a CPA.
“When I’m on a board, even if I’m not on their budget committee or their finance committee or their investment committee, I’m still looking at all the details, because I’m equally responsible as every other board member, including those people on that specific committee,” Doyle said. “We are all equally responsible for the decisions that are made by that board that are financially driven.
“Ultimately as a board member, that’s still my responsibility to be the person to lift up my hand, and say, Gosh, you know, the governance committee hasn’t handled this … I’m very uncomfortable, we need to do something about it.
“I think that’s the big piece when you step onto a board, you cannot abdicate any level of responsibility,” she said.
What we can all learn from United Way, Habitat for Humanity
With the recent news headlines, Layman said it’s a particularly good time for nonprofits of any size to assess policies and procedures and seek third-party assistance to review them.
The local United Way and Habitat for Humanity are local affiliates for national organizations that one would think should have their ducks in a row, but that isn’t necessarily always the case.
“Given this happened to two prominent organizations that have been active locally and throughout the country for a long time, means that, quite literally, this could happen with any nonprofit,” Layman said.
Upcoming workshop
A “Strategic Decision Making” workshop will take place on Wednesday, Jan. 29, from 9:30-11:30 a.m. at DuPont Community Credit Union in Waynesboro. The workshop, presented by David Deaton, a Center for Nonprofit Excellence trainer and founder of Deaton Group LLC, will focus on decision-making.
About the class: Making the right critical decision at the right time is one of the hallmarks of a great leader. Decisions should align with one’s greater purpose, be made in a timely manner, and engage key constituents. Learn how to create greater clarity in thinking and how to build habits that lessen the sense of feeling overwhelmed.
Registration information is available online at cfcbr.org
The Habitat series
This article is the final installment of a three-part series. Links to the first two parts of the series are below.
- Part one: A tumultuous year for Habitat ends on a positive note (Jan. 8, 2025)
- Part two: Habitat’s work continues, its plans for the future (Jan. 9, 2025)
- Part three: What we can all learn from Habitat, United Way
Related stories
For related stories, search “embezzlement” on Augusta Free Press.
- Staunton School Board chair resigns position amid PTA embezzlement allegation
- Waynesboro business owner shares his side of story after embezzlement charges
- Former DuPont Community Credit Union employee faces six felony embezzlement charges
- Arrest made in embezzlement case involving Staunton Farmers’ Market
- Wildlife Center of Virginia office manager charged with embezzlement
- Man arrested for embezzlement from Waynesboro Elks Lodge
- Six-year sentence imposed in $4M Virginia Department of Health embezzlement scheme
- UVA Football alum Chris Harrison indicted on embezzlement charges
- Former ED of Southwest Regional Recreation Authority pleads guilty to fraud, embezzlement
- Former Virginia bank manager pleads guilty to $2.4M embezzlement scheme
- Virginia man pleads guilty in $1.9 million embezzlement scheme, faces 20 years in prison
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Crystal Graham
