Charity Governance

THAT RECENT UNPLEASANTNESS: MYTHS PERPETUATED BY THE LUCILE PACKARD FOUNDATION FOR CHILDREN’S HEALTH

DATELINE: October 9, 2007, Chicago

We saw an article several weeks ago reporting that the Lucile Packard Foundation for Children's Health was the victim of a $350,000 employee theft. We wondered whether there was a major internal control failure, and then we moved on. Then we read a fuller account by Andrew Valencia in the Stanford Daily. Worker Steals Funds from Kids Charity, Oct. 2, 2007. Valencia reports that the foundation...

CALIFORNIA ATTORNEY GENERAL ENTERS INTO A SETTLEMENT AGREEMENT WITH THE AMERICAN RED CROSS: PUZZLING, BUT VERY INTERESTING

Dateline: January 22, 2007, Chicago--GO BEARS

Now-former California Attorney General Bill Lockyer announced late last year (December 27, 2006) that he had entered into an agreement with the American Red Cross (ARC) over its Donor Direct program and the way the ARC determines executive compensation.  In the past we have defended the ARC against certain attacks made by the media and elected officials, but even we are beginning to wonder:  This is a major charitable organization with hundreds of millions of dollars flowing through its coffers.  Why...

AIR BALL: ALLEGATIONS THAT THE CHARLES D. SMITH FOUNDATION FAILED TO GUARD AGAINST MISMANAGEMENT

Last week, Anthony Ball, brought in as an interim director to clean up the mess at Bridgeport, Connecticut’s Charles D. Smith Foundation, resigned, claiming that the foundation is “essentially insolvent.” according to Bill Cummings of the Connecticut Post.  See Bill Cummings, The Smith Foundation Tries to Rebuild Organization, Reputation:  Records Show Charity Poorly Run for Years, Conn. Post, Nov. 19, 2006.  The foundation’s founder and namesake is a former NBA star, once a power forward with the Los Angeles Clippers, New York Knicks, and San Antonio Spurs before retiring in 1997. 

Smith created the foundation to aid...

READ YOUR NONPROFIT’S FIDELITY INSURANCE POLICY CAREFULLY: ONE ORGANIZATION PAID A HIGH PRICE FOR AN EMPLOYEE'S FRAUD

We were recently at a nonprofit conference and had the opportunity to speak with an insurance agent who was exhibiting at the conference.  He told us a story that should scare every nonprofit.  A social services agency had fidelity insurance policy to cover theft or embezzlement by an employee of the agency.  That is certainly a policy that every nonprofit organization should give serious consideration to acquiring.  Unfortunately...

WATCH THOSE NAMED-INSURED AND INDEMNIFICATION CLAUSES WHEN CONTRACTING

The battle of the forms still rages in commercial dealings today.  A nonprofit enters into a contract for services with a service provider and the terms of the contract provides that the nonprofit agrees to indemnify the service provider in the event the provider is sued as a consequence of providing services.  A variation on the theme can be found in contracts with hotels for conference.  The nonprofit is often required to agree to cover any damage to the hotel caused by confernece attendees attending the conference.  When things to wrong, everybody looks to...