Fighting Back From Scandal at a Nonprofit Agency

Written by Alex Comfort, CFRE

Everything you do, every decision you make, and everything that happens at your organization should look OK in a newspaper headline.

Every agency needs to quietly adhere to the statement above. Hiring, firing, budget changes, all financial activities. Everything must adhere to this philosophy. 

Unfortunately, I have had to fight through some nasty scandals in my time, especially the Covenant House scandal in 1988-89. My latest one as a consultant was sort of a “semi-scandal,” but we have treated it just the same.

The agency started with a clear, definable mission that everyone supported – saving animals. As the years went by, two things happened:

1. The founder, who didn’t have a typical board of directors (sorry about that, IRS!) decided to greatly expand the mission believing that massive funding would follow. (It didn’t.)
2. The agency began aggressively advocating a “vegan agenda,” which became very well known in the region. That didn’t sit well with the majority of its donors.

The founder also had a world-class ability to alienate people, including me. Things eventually got so bad that the founder stepped down, leaving a massive debt and a shattered agency. A bright, capable young person was hired to right the ship and the new executive director asked for my help.

 The “scandal-type things” were as follows:

1. Very poor records.
2. Financial mismanagement.
3. No proper board of directors.
4. Mission way off track.

While these aren’t to the scale of the Covenant House disaster, the agency did need to address what had occurred if it ever wanted to salvage relationships with donors and volunteers.

With any type of scandal, I recommend the following:

1. An immediate outside investigation.
2. Complete transparency with all constituents.
3. Dismiss staff at fault sooner rather than later.
4. Apologize for everything that is appropriate, fully and without excuses.
5. Work with the media to report accurately. Draft news releases as appropriate.
6. Let your attorney know what is going on.

 In this case, the new executive director had to:

1. Create a proper board – she was good at this.
2. Get the fiscal house in order – this is proceeding well.
3. Decide to sell a large piece of land and forget about the big mission expansion that was clearly not going to happen – sale is happening.
4. Immediately let some staff go – on-going.

I worked with the executive director to draft a letter to her constituency groups. She was loath to “make her first message about herself,” but I finally succeeded in convincing her to do just that, complete with a color picture. The letter was great.The fact that the agency could go under was clearly stated, and the case for financial support was strong. She also did a great job of re-committing to the core mission of saving animals. 

We also discussed the importance of visiting her main donors personally, both those who rallied to her support and those who were very angry about losing major contributions they had made towards the purchase of the land that is ultimately being sold. While I’m sure this is a difficult task, she is proceeding with the in-person meetings.

At this stage the essential thing is to PROCLAIM THE MISSION AND TELL WHY THE NEW EXECUTIVE DIRECTOR CAN BE TRUSTED. This is hard and time-consuming work. One tactic I suggested was starting a monthly (or every six weeks) “Advisory Board” meeting, giving the agency’s top donors a chance to offer suggestions and feedback.

Finally, for key staff and board members, it’s always important to “Broaden Your Base.” Reach out to people you can trust to get outside perspectives on the actions you should take. Do not pull in and hide.

I sincerely hope you have no idea what I am talking about and that you never do. But in the nonprofit world, you should plan on this nevertheless.