I make my reference library on nonprofit governance and fundraising available for free loan to nonprofit boards and executives -- click the image above to go to my library catalog, where you can browse the many titles (look for the tags that interest you to sort through the 300+ titles; you can start with fundraising and nonprofits).
I maintain an extensive collection of resources to assist me in my practice, which nearly all consists of working to help consumers, elders, employees, and nonprofits. Rather than have these valuable resources sit idly, I make them available to nonprofit boards and executives in the Salem area. To check out my collection, go here, and search on items tagged with "nonprofits" to winnow down the collection to those helpful for nonprofit leaders.
I just had a call from a very nice person who needs caregivers around-the-clock, 365 days a year. One of these caregivers recently stole money from from my friend. My friend said it happened about six weeks ago, and that the person was no longer serving as a caregiver, so she was just going to let it go.
I had to explain to her why it was so important that she call the police:
Because other people looking to hire caregivers are going to look at the home-care workers' registry and look at the results of the criminal background checks, and if she doesn't file a police report about the theft, this caregiver will appear to have both a lot of experience and no problems in her background.
My friend felt uncomfortable; the caregiver is young, and my friend doesn't see herself as vindictive. Basically, she does not want to get the other person in trouble.
But of course, it's not my friend who is responsible for the trouble — the thief did that. My friend needs to report to protect others from this person and ultimately to protect herself by making sure that the system for background checks is reliable and complete. Someone who will steal from a disabled person getting 24 hour care is not someone who should be able to find work as a caregiver for other vulnerable people.
So you're not being kind by overlooking abuse or thefts like this. Consider what you're doing to the person's next victim.
My friend was also concerned that, because it would be her word against the caregiver's, she would not be able to prove that the theft occurred. I made two points about that:
The situation is the same with nonprofits. Many times when nonprofits are ripped off, the tendency among the members as to keep it quiet and not make a big fuss about it. It's also very appealing for the board to say that they were partially at fault for allowing the thief to rip them off, and therefore they don't want the bad publicity to their organization etc. etc. The big problem with this logic is the same as in my friend's case: when crime victims don't report crimes, the criminals are allowed to find new victims and victimize them, because they have no reason to know about the person's past.
So, uncomfortable as it is, if someone rips you off, don't make it your job to help them cover it up. If someone abuses you or steals from you, whether you are an individual or as part of an organization, call the police. Let the police and the court system make the decisions on prosecution and any punishment that might occur if warranted.
Bottom line: don't help criminals victimize other people by failing to report past crimes.
UPDATE: A helpful assistant attorney general points out:
"Great points, John. You might also tell your friend and others that they can call the Medicaid Fraud Unit at the Oregon Department of Justice if the care occurs at home and the provider is paid by the State, or if the theft or financial exploitation occurred in a Medicaid-funded facility [note that nearly all nursing homes and assisted living facilities accept Medicaid funding - JMG] whether or not the victim is a Medicaid recipient."
Thanks, AAG! You can reach the Medicaid Fraud Unit (MFU) at 971-673-1971.
1. New interactive Form 1023 available for review
New: Free for Nonprofits--Borrow books of interest for nonprofits from the John Gear Law Office nonprofit library
One of the biggest challenges facing nonprofit businesses is access to reliable guidance about how to do business -- how to be effective while complying with the myriad laws that affect how the nonprofit operates.
To help Oregon nonprofits meet this challenge, I've decided to make my library available to Oregon nonprofit board members and nonprofit executives. Check out books tagged as "nonprofits" in my office library here, and contact me if you want to arrange to borrow any of the resources, at no charge.
I'm skeptical of any bright-line rule that says that a nonprofit is no good because it spends too great a percentage of its revenue on administrative overhead. In fact, what I tend to see is the exact opposite: nonprofits that starve their administrative side in an effort to please the raters, which only sets them up for terrible problems of the gravest sort, including embezzlement, failure to find or retain good people, employment and wage claims, etc. The bottom line is that nonprofits are small businesses, and running small businesses is not easy, especially newer and smaller ones. So bright-line cutoffs are usually to be taken with a big grain of salt.
Ok, that said, here are some outfits that require a charitable interpretation of the word "charity" just to be considered as one. In other words, these aren't close -- these are the stinkers that cause good nonprofits such problems, because when the public gets a whiff of these stinkers, all nonprofits get a bad name. The best thing to do with this list is check it before you write your end-of-year gift checks -- and make sure you avoid these outfits. I'll just give the top three -- download the full list of 20 below.
Organization Average Annual Percent Spent
Expenditures Charitable Cause
Law Enforcement Education Program $2,299,994 2.7%
Shiloh International Ministries $846,340 3.2%
La Verne, CA
Research Organization $783,217 4.2%
(I'm pleased to note that there are no Oregon nonprofits among this "Worst 20" list, although sad to see several in Everett, Washington.)
A good essay about the biggest risk in nonprofit leadership (pdf):
Seeing but not really observing what's going on in the organization.
Nearly all of Behn's public management essays are good -- although supposedly aimed at the government sector, I can't think of a single non-governmental nonprofit that would not benefit greatly by having all its board and senior staff read and discuss one of his essays every month. Or share them all and do a retreat where different board members summarize the ideas and discuss how they could be applied within their own organization.
The time to verify your recordkeeping systems are in place and working well is BEFORE the crash.
The case below is a vital reminder for nonprofits of the value of keeping proper records about your organization:
Failure to keep accurate records about what employees do cost this small business almost $70,000 in higher worker's comp premiums.
The only differences between that business and most nonprofits are
(1) that the business will definitely learn from the experience, and
(2) that the business will have the resources to pay the higher assessment until the records are straightened out, if they aren't already.
If your nonprofit thinks keeping timely and accurate records is just something to aspire to, you and your group are probably at risk in any number of areas. Remember, the prime duty of a board member for a nonprofit is to do what a reasonable and prudent person would do to oversee the affairs of the organization, which means paying attention, which requires timely and accurate records.
As a board member, you don't have to check every record yourself, but you have to assure yourself that there is a SYSTEM to make sure that the records are being kept, that there is a SYSTEM so that they are checked as much as necessary to give you confidence that they are accurate, and (most important) that there is a SYSTEM in place so that, if they aren't kept or are being kept poorly, you will quickly know it --- before you get the $70,000 bill.
I advise nonprofits as a key focus in my practice. Like all small businesses, nonprofits struggle with payroll taxes, worker's comp, unemployment insurance, and sometimes the board decides, "hey, I've got an idea, let's just use independent contractors instead of employees."
It's possible to do that, but you really have to work hard and take special care to do it right, or you can face penalties and interest on the not-quite-avoided payroll taxes.
Remember, authorities at every level (IRS, SAIF, Employment Dept.) have a very serious interest in making sure that only those people who are truly independent contractors get treated that way. And don't think that the "contractor" wanting to be treated that way cuts any ice with anybody. People have a funny way of having memory lapses in times of trouble -- such as when budget cuts force you to drop the contractor, who only then realizes that "independent contractors" can't claim unemployment, or when they fall down the stairs while working for you and only then learn that they don't have any worker's comp coverage (of course, not having worker's comp also might mean that they could have a right of action against your agency for personal injury).
If you're only going to know one thing about this area of law it's this: Anyone who does work for pay is an employee unless you establish otherwise, and the burden is on you, the employer to prove otherwise; in other words, if you are using an independent contractor in your nonprofit and someone decides that you have misclassified that person and that you should have been paying payroll taxes on their wages all along, it is you who has to prove them wrong. (If you fight them to a tie on the issue, then you lose, because you failed to carry your burden.)
The opinion announced today in Oregon is a well-written, clear cut guide to the issue that anyone who is using independent contractors might want to review and discuss with an attorney versed in this area.
I've been especially gratified by the response to the services I offer for nonprofit organizations. When I went into practice, I knew that there were lots of places where many hardworking folks needed a hand, but I also know that too many nonprofits wait until it's very hard to help them to reach out and ask for it. Some of the most satisfying work I do is to help groups of volunteers who have formed (or are thinking about forming) an organization to pursue their vision for a better community. I love being able to share some of what I've learned over the years.
And one reason I founded the Nonprofit Organizations Law Section as a professional practice section in the Oregon State Bar was that I saw that there wasn't enough sharing of resources among people who support the sector. Sometimes it seems like competitors in the for-profit sector were doing more sharing than nonprofits who don't even compete with each other.
Then, today, it occurred to me that I could do more, because I have a lot of great resources on my shelf that could benefit more groups than just my clients. So, to continue with the sharing theme, I would like to offer to make my bookshelf available to nonprofits here in Salem (or with board members willing to come to Salem). Just call or send me an email to make an appointment to have your executive director or a couple board members come by to check out what's available -- when I got to looking at it today, I realized it's quite a decent collection of current materials.
I hope I can share some with you soon.