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Recent Embezzlement Not a Reflection on All Maine Nonprofits

by Scott Schnapp

While details continue to emerge regarding the massive embezzlement of funds from United Midcoast Charities by its longtime Board Chair, Rusty Brace, and feelings remain raw in the Camden community regarding how this possibly could have happened, it’s important for the public to recognize that these kinds of situations are very rare and not segregated to the nonprofit sector. And, while this situation should undoubtedly serve as a call to action for nonprofit board and staff leaders, it’s also important to examine it through the lens of the unique elements of systemic failure that created it, and recognize that these cases can easily be avoided when nonprofits access available resources to build appropriate transparency and accountability practices.

It’s also important to note that there may be a public perception that embezzlement happens more often in the nonprofit sector than in other sectors, since nonprofit embezzlements tend to be highlighted more in the media. In fact, embezzlement occurs equally or more often in the for-profit sector, as several recent local for-profit embezzlements have illustrated, and is more a by-product of poor management oversight and lax policies and procedures than a sectoral issue. Since the nonprofit sector is critically dependent on retaining the public trust in order to sustain its mission based work, it could be argued that nonprofits have a higher incentive to establish transparent and accountable business practices and procedures. In any event, these stories should serve as a stark reminder to organizational leaders in all sectors to review and assess their current financial practices and develop more effective checks and balances, as the bottom line is that well-managed organizations in all sectors proactively address and seek to eliminate the opportunity for these kinds of situations to occur.

In order to assist nonprofit leaders in managing their organizations around best practice standards, the Maine Association of Nonprofits (MANP) developed its Guiding Principles + Practices for Nonprofit Excellence in Maine tools ten years ago. These resources consist of a comprehensive management training program, assessment tools and a free resource library to assist nonprofit staff and board leaders in developing practices that adhere to the highest professional and ethical standards. These resources reinforce MANP’s central belief that aligning a nonprofit’s policies and procedures around a set of best practice standards is the best way to advance a nonprofit’s mission impact, build public trust and contribute towards its long-term community impact and financial sustainability.

Along with the many services that MANP offers to nonprofits, there are many other transparency resources available to donors, such as GuideStar and Charity Navigator, among others, to help them assess the financial status, checks and balances and financial controls of organizations they support. Donors can also ask nonprofits for audited financials and review IRS 990 forms on agency websites to help assess the overall health and management of a nonprofit.

So, when stories like the United Midcoast Charities come to light, we hope that the public doesn’t leap to incorrect assumptions regarding the entire sector, as the vast majority of Maine nonprofits are well managed and recognize that operating in an ethical and accountable manner is essential to building public confidence and support for their mission. The sector fully recognizes that the erosion of public trust can be extremely damaging and that the sustainability of the nonprofit sector and its continuing impact on Maine’s quality of life is inextricably linked to the trust which the public places in it. While the United Midcoast Charities story is an awful example of poor oversight and accountability, misplaced trust and community betrayal, the elements that created it are unique to its situation, extremely rare and can easily be avoided through the development of sound, mission-based business practices.

As it has throughout its 20 year history of serving Maine’s nonprofit sector, MANP remains committed to promoting and supporting the highest standards of professional and ethical conduct among nonprofit leadership through its many programs, resources and services.

Related Post:
What to Do if You Suspect Fraud or Misconduct at a Maine Nonprofit