When a Bad Thing Happens at a Good Non-Profit – December, 2012

So here’s what happened. At the May 31 meeting of the Executive Committee of the Board of Directors of the Community Action Agency of Somerville (CAAS) the agency’s independent auditor reported that the Executive Director had used a CAAS credit card to make many personal purchases and that the Director of Finance knew about it. The three of us in the room, Sonja Darai, vice president, Kellee Middlebrooks, treasurer, and I, president, were, to put it mildly, stunned.

Since hiring the Executive Director in 2009, the Board and staff had been
working steadfastly to improve CAAS. A Quality Improvement Plan, created
with the help of the New England Institute for Quality Community Action and
the Department of Housing and Community Development, was almost fully
implemented. Newly revised financial policies and procedures along with
whistleblower and conflict-of-interest policies had been established. The
Finance Committee regularly met with the Director of Finance and reviewed
reports that he had prepared.

After learning that the credit card had been misused, we took immediate
action. Within 24 hours, we impounded all of the agency’s credit cards,
placed the Executive Director on leave, contacted CAAS’ lawyer, and held a
joint Executive and Finance Committee meeting. At that meeting, we set our
priorities. We needed to get the agency’s money – taxpayers’ money – back.
We needed to improve financial controls. We needed to hold people
accountable for their actions. We agreed that we must act quickly,
correctly, and transparently. I then sent an e-mailed to everyone on Board
outlining our situation and asking for help to restore the organization’s
integrity swiftly and judicially.

At the June Board meeting, we heard the Executive Director’s side of the
story, and then formally discussed ending her tenure. In separating the
Executive Director from CAAS, we discovered that pursuing what seemed just
might not be in the agency’s long-term best interests. Simply showing her
the door would expose CAAS to a lawsuit that would cost hundreds of
thousands of dollars to defend. Early on, it became clear that it would take
months to determine the exact amount misused. A long period of uncertainty
would seriously undermine the important work done by CAAS.

In the following weeks, we talked with funders, elected officials, and
stakeholders; appointed an acting Executive Director; and hired a consulting
firm with extensive experience in identifying fraudulent transactions. Out
of necessity, members of the Board got involved in day-to-day operations,
helping the acting Executive Director hold the agency together.

The crisis took a toll. Several Board members, unable to continue to give
the time and attention needed, gave up their seats. As a representative of
the low-income community, I had been elected to a two-year term in 2010. The
Board president serves a one-year term. Both of my terms expired at CAAS’
annual meeting on October 23. With a vibrant cadre of new members joining
the Board, a strong, committed Executive Committee in place, and the hiring
an interim Executive Director experienced in non-profit turn around
immanent, I had little left to contribute and chose not to seek reelection.

Bad things can happen at any organization. Though flawed, the system worked.
The auditor did what he was supposed to do – he uncovered improprieties. The
Board did what it was supposed to do – it acted quickly and openly to
protect the agency. Good organizations see crisis as an opportunity for
transformation. CAAS, with its extraordinary tradition of diverse community
members working together for the commonweal, is now posed to build on its
past, and continue to improve how it provides vital services to our
community.

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