Sunday, May 30, 2010

Employment difficulties

Have you ever had difficulty finding a new staff member and had another staff member recommend a family member? There are a number of issues that should seriously be considered.

Firstly, the relationship may cause tension in the workplace – either between the two or between them and other employees / volunteers. The other issue is that it potentially makes is easier for them to collude to commit fraud as a result of the close family relationship.

So how can you deal with this issue? A decision needs to be made whether it is appropriate to employ relatives of current employees. The employment policy should clearly set out that family members will not be employed at least, in the same area or allowing one family member to supervise the other family member.

Sunday, May 16, 2010

Front page of the Newspaper Test

When management or the board of any non profit makes a decision, they need to consider a number of issues - eg. what will it cost the organisation, what benefits will the organisation receive.

However, another issue needs to be considered when making decisions - how would others view your decision if it made the front page of the newspaper?  Would you lose donations?  Would there be agreement with your decision?  Every decision should be considered to this extent.  Those decision can very from how do you spend funds raised to should you report fraud to the police.

Of course, some non profits are at greater risk of hitting the front page of a newspaper than other non profits (eg. a charity would be a reasonably high risk as a significant portion of funds are publically raised).  However, this one question is a good test of if the decision is in the best interests of the organisation.

Sunday, May 2, 2010

Educating Donors

How many times have you had questions raised about what percentage of funds donated actually goes directly to the mission of the organisation? It is difficult to achieve and then maintain an appropriate balance between the expectations of donors of funds where they want every cent of every dollar donated to go to the mission of the organisation and having sufficient funds to be able to develop and maintain appropriate controls.

With demands from donors wanting all funds donated going to the mission, how does the organisation pay expenses, such as market rates of salary / wages to employees and having the resources to maintain controls.

If an employee is not paid at market rates and controls are not maintained appropriately, the risk of fraud will increase.

So what is the answer? It is not an easy question to answer considering the amount of media that is regularly given to the percentage of donated funds that are used for the organisation’s mission. Ultimately it is a longer term education process so that donors of funds understand that a reasonable percentage of funds are needed to administer the organisation.