CYA of Board Membership

Friends, I had a colleague reach out to me this morning with a concern that the previous treasurer on her board could be embezzling money from the organization...

Do any of these red flags sound familiar to you??

• Immediately upon becoming treasurer this person wanted to switch banks.

• This person has refused (for almost a year) to pass the treasurer duties (and access to accounts) on to the next person, who was voted in as treasurer in December 2023.

• There are fraud prevention policies in place, but no one on the committee / board is holding the treasurer responsible for adhering to those policies - such as signing checks, providing financial statements and reports at monthly meetings, approving expenditures, and the list goes on!

Unfortunately for my colleague, she is in real pickle. My recommendation - either leave the board or insist that the previous treasurer be fired from their position - and all passwords and access to accounts be removed from that person. Here's why: Having her name listed as a board member while the possibility of fraud is occurring could make her personally liable for any loss of funds that has happened while she was in that position.

So, then the question becomes, how do you remove someone from a position?

Well, the first answer to that question is - what do your bylaws say?

But not knowing the bylaws, here is my recommendation for next steps:

-Take the issue to the rest of the board with a vote of non-confidence and making it effective immediately, vote this person off the board.

• If it hasn't yet been done, yet, at the same time, vote IN a new treasurer.

• New treasurer should go directly to all financial institutions where the org has any accounts, and take the board minutes demonstrating new leadership. The previous person should have NO access to any accounts any longer.

• Review the statements - along with the rest of the board. If the statements verify fraud has indeed taken place, or the possibility of such, then

• Press charges against the previous treasurer. This is serious and if not done could still indicate culpability for the fraud that occurred. As hard as it might be - do NOT skip this step!

This type of scenario breaks my heart and makes me angry at the same time. It appears that someone has taken advantage of a group of people who agreed to be on a board without knowledge of the responsibilities and liabilities they carry with that position.

Do you serve on a board where you feel people, either through ignorance or passivity are not aware of their personal responsibility and liability? Call me - this is not a joking matter. Board members carry a responsibility bestowed on them by the government and the confidence of the org at large, and the community that they will provide duty of care, loyalty, and obedience, ensuring that financially the organization is acting with fiduciary responsibility and adhering to donor intent.

"Is There a Grant For Your Project?"

I was recently asked if there was a grant to help with someone starting a school to support individual students who have been identified with Autism...

To answer, "a" grant will not be sufficient for the scale of funding that will be required for starting a new school. But, I believe there is plenty of funding available if you know where to look.

I usually recommend looking for funding opportunities at ten-fold the amount of funding required for a project. So, if the school will need $1M to start, my recommendation would be to find a variety of opportunities and apply for at least $10M.

A couple of other things to note:

1. I highly recommend anyone starting out to look for and build relationships with individual donors. This is a more sustainable form of fundraising because if you lose a handful of 200-300 individuals, you can still maintain operations. Where on the other hand if you have 5-10 grants and you lose one, you could be in financial hardship. Also, most funders do not want to be considered a bank account and therefore most do not allow funding on an ongoing basis. Many funders that I have worked with put a maximum number of grant awards at 2-3 years in a row. Grant work is hard - and not guaranteed. So, build a donor base!!
   

2. When an organization is first starting out, identifying funders who will give based only on an idea or concept is nearly impossible. You must first begin working and demonstrating the good you will do before most people are willing to give their dollars in support.

One of the services I offer is grant research. This service provides 8-10 funders with the idea stated above in mind - funding opportunities at least ten times the needed amount. The org would get a comprehensive dossier detailing the name of the funder, their contact information, dates of requests for proposals (RFP's) if available, the amount of funding that can be requested (again, only if available), and a document that lists the best ways to connect with a funder. I would not recommend this service for a capital campaign - which is what will be needed for any kind of building (either purchase or new build). But, this service might be a good option for starting to provide services.

For a campaign that includes a place to offer services, I recommend they look at hiring a development director. This position is not cheap and I would recommend budgeting $80,000 - $100,000 annually. The person will need to travel and begin relationships to be successful.

Are you considering the need for grant funders? Do you need someone to remove that task from your to-do list? Schedule a call here: https://lnkd.in/gXfZRdFx

I look forward to meeting you!