Caught in Fundraising Squeeze, Nonprofit Boards Need to Prove Their Mettle to Win Donations

A new book helps board members get up to speed on financial statements and oversight responsibilities

NEW YORK (September 20, 2011) – Charitable giving has taken a big hit during the economic downturn, putting more pressure on nonprofit boards to prove their organizations are well run and meeting their mission. Yet many board members lack the ability to read a financial statement or shrink from firm oversight of management, according to the authors of a new book from the American Institute of Certified Public Accountants.

The guide, “The Best of Boards: Sound Governance and Leadership for Nonprofit Organizations,” was written by Marci Thomas, a CPA who advises nonprofit boards, and Kim Strom-Gottfried, a University of North Carolina-Chapel Hill professor who specializes in change management.  It offers a primer on the legal and ethical aspects of serving on a board, the rudiments of financial analysis and internal controls, and useful strategies for leading change within nonprofit organizations.

Tips from the authors include:

·         In an era of scarce resources, boards need to redefine their notions of risk. A narrow view of simply meeting compliance standards won’t cut it–if fraud occurs on your watch, the real victim could be your group’s reputation. A decade ago, the executive director of the United Way of the National Capital Area was charged with defrauding the Washington, D.C., charity of more than $500,000. The organization had raised $90 million in 2001, the year before the improprieties came to light. By the time the official pleaded guilty in 2004, annual fundraising had sunk to $19 million. “Without checks and balances on a chief executive, really bad things can happen,” Thomas says.

·         Fraud can occur anywhere, but the right controls can be a powerful deterrent. The Ponzi scheme operated by Bernard Madoff took a big chunk out of many nonprofit endowments, and fooled even sophisticated investors. Yet most accounting scandals are carried out by a single person, and well-defined internal controls can reduce those opportunities for mischief.

·         Best practices for accountability and transparency are a selling point. Board members that are well-versed in their group’s mission and finances can serve as ambassadors to the donor community, providing assurance that money will be well spent.

If you’d like to interview the authors or receive a review copy of the book, please feel free to contact Jeff May at jmay@aicpa.org or (212) 596-6122.

About AICPA

The American Institute of Certified Public Accountants (www.aicpa.org), founded in 1887, is the world’s largest association representing the accounting profession, with nearly 377,000 members in 128 countries.  AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting; membership is also available to accounting students and CPA candidates. The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, non-profit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination.


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