Nip it in the Bud! Make it Easier to Report Financial Improprieties

Springtime at my house means lots of outdoor gardening projects.  One that I like to do best is mulching the flower beds.  In addition to looking neat and tidy, the mulch helps my flower beds retain a bit of water, and stops the growth of some of the weeds.  In my garden (maybe yours, too), the mulch never stops the growth of all weeds.  There are always at least some very hardy weeds that get through even the best mulched plots!  And if I don’t pull it at first sight, the unwanted weeds will cast a shadow over my beautiful flowers.  In some small way, the effort of placing mulch in the flower beds is the same as covering up or ignoring financial improprieites in your organization. If you fail to have a good whistleblower policy, you are setting your organization up for a situation where concerns about improprieties only have one avenue to see the light of day — the public or the media.

Nonprofits should take care to have strong whistleblower policies in place.  As the Standards for Excellence® code states, “Organizations should provide employees, board members and volunteers a confidential means to report suspected financial impropriety or misuse of organizational resources and should have in place a policy prohibiting retaliation against persons reporting improprieties.”  The IRS Form 990 includes a question on whistleblower policies, and of course, the Sarbanes-Oxley Act requires that nonprofits have a whistleblower policy in place.  In short, organizations should take care to have the type of organizational culture that encourages bringing to light and stopping situations where there might be improprieties.  If you fail to have a good whistleblower policy, you are setting your organization up for a situation where concerns about improprieties are squelched, where doubt and distrust fester among staff and board members, and then, the difficult problems may come out in more damaging ways.  Wouldn’t it be better to have straightforward and easy to navigate channels for reporting and stopping improprieties when they are minor problems than to wait until the problems are so difficult that they become public relations nightmares — like those big hardy weeds that force themselves up through my piles of mulch?

Did you know?  The Standards for Excellence® Educational Resource Packet, “Reporting Financial Improprieties,” includes a discussion of whistleblower policies and a sample as well. The packet is free and available to Standards for Excellence Institute® members.  It is available through the members only section of our website.  Hard copies are also available upon request.

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About Amy Coates Madsen

Amy Coates Madsen serves as the Program Director of the Standards for Excellence Institute.
This entry was posted in Financial Management, Legal. Bookmark the permalink.

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