Help me not get arrested.
April 11, 2011 1:19 PM   Subscribe

I am volunteering for a 501c(3). I have been given the task of writing checks to pay the bills. We are paying for the executive director's personal bills. Help!

I first noticed receipts on the non-profit's credit card to various restaurants for a single meal, so it wasn't a business lunch. But then I noticed TV, gas, and electric bills for his home address. Today the ED handed a stack of blank checks from the non-profits account and asked to pay the bills, one of which is insurance for his car that the non-profit does not pay for.

These expenses are not explicitly mentioned in the budget and I believe the board is unaware that their membership dues and fundraising efforts are not only paying the ED's very generous salary but also his living expenses. I have physical copies of all the receipts filed.

Is this illegal? If so, what can I do to protect myself. What can I do to change this?

Bonus: the ED is helping me get a job outside the organization. So I might not want to send him up the river immediately.

Throw away email:
posted by anonymous to Law & Government (21 answers total) 8 users marked this as a favorite
Is there someone on the board (like an accountant or lawyer) whom you could discreetly ask, as if you were just kind of a newb whether this is totally copacetic or if there any special protocols that should be followed with expenses that might give an appearance if impropriety to show they're all good? That makes it clear that you're not Judging these expenses as totally fishy yourself, but that you want to be sure you're doing everything right.

Because it might be part of his agreed-upon benefits, but it sure sounds Fishy.
posted by ldthomps at 1:27 PM on April 11, 2011 [3 favorites]

Is there somebody on the board you could ask? It's possible those expenses are a part of his compensation package. Who do you report to other than the ED? Who's running the place?
posted by ThePinkSuperhero at 1:27 PM on April 11, 2011 [1 favorite]

According to the IRS: "A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests."

That, to me, makes it sound like he is, at the very least, taking advantage of the board.

Ethically, I'd have a real problem with this. Who organizes the volunteers (like you)? Is there an office director or administrator you could speak with about these expenses? Could you just ask for clarification, i.e., "Hey, is there a different account for personal expenses? I'm not sure how to file these receipts..." or something like that.
posted by misha at 1:32 PM on April 11, 2011

Do you have a Compliance or Ethics Officer? Noting your concern and investigating would fall to him/her.
posted by wg at 1:34 PM on April 11, 2011

Oh, and I personally would be REALLY careful about this, because if only you and the ED know about it, you are setting yourself up to take the fall if you write out these checks and the IRS or law enforcement checks into them.

Think about it: Why did the ED have you handle the checks AND offer to get you a job? Is he, even subtly, asking for your silence about these expenditures and offering you the job as a kickback for doing so?
posted by misha at 1:36 PM on April 11, 2011 [8 favorites]

Whether or not it's illegal, it is certainly unethical. However, you are personally not in danger - the organization's nonprofit status is. If this shows up in their 990 at the end of the year as something the accountant can't explain, they can lost their exempt status and be heavily fined as well.

As a volunteer, you are presumably not receiving compensation for your work, so it would be difficult to see how you could be benefiting directly from this potentially fraudulent activity. But since the dude is promising you a job elsewhere and this promise is making you reluctant to report his suspicious behavior, this can lead to no good.
posted by elizardbits at 1:37 PM on April 11, 2011

Assuming for a moment that this is as fishy as it sounds; this guy is just trying to win your loyalty by schmoozing you with a job offer. If you approve his questionable expenses, he'll have something on you. Turn him in to the board and do yourself and the world a favour.
posted by bonobothegreat at 1:40 PM on April 11, 2011 [1 favorite]

Well, here's what I would do. IANAL. IANAPO.

I assume you have access to Quickbooks or whatever accounting software is being used to keep track of money.

I would create a new expense category named 'EDPersonal' and categorize all these bullsheee-eeee-eeee-it reimbursements as 'EDPersonal'. I'd also go back and re-categorize bogus expenses from the past 3 months into this category (only the past three months because probably stuff from 2010 has already gone to the accountant for taxes). Then I'd compose an email to the ED and the board members saying, in a very nonchalant way, that ED had run up $X of personal expenses, insurance, etc., and how should you handle reimbursing the charity for those?

Then see what happens.
posted by bq at 1:42 PM on April 11, 2011

I worked at a 501c(3) where this was the case (executives used their corporate cards to pay for personal charges) BUT I later learned that, after the credit card bills were paid, the finances department then had the cardholders to reimburse them for any non-business charges (e.g. I think some people's cell phone bills were included as business expenses, but not your netflix subscription). So, it's possible that it might be on the up-and-up, but it sure does seem fishy.
posted by Zephyrial at 1:42 PM on April 11, 2011

Ask him. Then optionally ask the treasurer. Sure, it could be on the up and up. Or it might not. But phrase your inquiries as "hey, I'm confused here" rather than "hey, are you a cheating SOB"
posted by rmd1023 at 1:47 PM on April 11, 2011

The first question is why the heck is a volunteer writing the checks? In any organization or corporation that's beyond the teeny tiny stage, accounting controls are a must. That involves some kind of separation of duties in the accounting process. In large companies, this involves entire departments checking each other's work, but at a minimum, the person writing the checks should be a different person from the person who verifies the receipts and expense reports, and both should be trusted employees or external accountants. I'd be very concerned about any non-profit that handed a box of blank checks to a volunteer, at least a volunteer who wasn't also a CPA or other accounting professional.

It's entirely possible that the non-profit just has incredibly lax accounting practices and that the ED reimburses the organization for the personal expenses, but this certainly sounds shady as hell. It's also possible that the organization agreed to cover some of his living expenses as part of a relocation arrangement or other form of compensation, but even if this is the case, it would still need to be handled differently for tax purposes. The treasurer is probably your go to for this (and I agree with rmd1023 to frame it as "I'm confused here") or any other board member. They are the ones with a fiduciary duty to the organization.
posted by zachlipton at 1:58 PM on April 11, 2011 [4 favorites]

I work at an NPO and it does seem really weird that a volunteer is writing the checks. Who signs them? Everywhere I've worked had a person who would get the bills - those would get passed on to managers for approval to pay (initialing the bill or something). Then that bookkeeper would cut the checks and the signer - who was a different employee - would look over them again before signing. If you're writing and signing that seems weird. In many places I've been people would reimburse the NPO for any personal use of the company card which was done after the original bill was paid.

If you manage to confirm that this is as shady as you think you should consider what that person's recommendation might be saying about you. You might not be the only one who knows that they're dishonest.
posted by oneear at 2:10 PM on April 11, 2011 [5 favorites]

[Disclaimer: I got the ED of a 501c3 fired after I discovered and disclosed that she was paying her oil bill on the orgs credit card]

nthing that having a volunteer do the check writing is weird, weird, weird. I've worked for some small (very small) NPOs in my day, but that just isn't something that we'd want a volunteer to do if we had any office staff at all.

I would bring this to the attention of the chair of the board of directors, and I'd do so in writing. I wouldn't phrase it as an accusation but rather something along the lines of "while volunteering at your organization, I was given the task of writing out checks. While performing this task, I noted that the following bills, which appeared to be the ED's personal bills (including [and here itemize some of them - creditor, amount, check number]) appeared to be the personal bills of the ED. I am concerned that the appearance of personal benefit to an employee could jeopardize your 501c3 status."

When you list some of the bills you were asked to pay, make sure they're the most clear-cut ones - the TV and the Gas as the home address, for example. I could see situations where single meals (even local ones) could be business related, and there may be some agreement about the insurance (because of possible business-related use of the car) but you list some here that clearly are ... something else.

w/r/t the whole "getting me a job" thing - I think you have to the right thing here and disclose, as soon as you can. Not doing so has very serious implications for the entire organization.
posted by anastasiav at 2:19 PM on April 11, 2011 [9 favorites]

Wow, a volunteer writing the checks. What has this world come to? I would do something. I don't know what it would be in your case, but I think trying to meet with a board member will be helpful. Luckily, getting fired from a volunteer position is truly not the end of the world.
posted by parmanparman at 2:21 PM on April 11, 2011

This is bizarre - talk to your superior, talk to whoever else you think you should, until you're satisfied. If you're not satisfied, then talk to the IRS. I am not an expert.
posted by Salvor Hardin at 2:38 PM on April 11, 2011

If you refuse to report this because of the job offer you are complicit in the wrongdoing.

Just sayin'.
posted by St. Alia of the Bunnies at 2:40 PM on April 11, 2011 [11 favorites]

I agree with everything anastasiav recommends.

I also think bq's plan of categorizing the books (saved as a SEPARATE copy of the books, and not stored on the NPO's machine) is a good idea, but I wouldn't just send a letter to the ED and the board, that's kind of like airing his dirty laundry without his permission and without 100% certainty that there's any wrongdoing.

I think a letter to one trustworthy board member that mentions you have records from all of fiscal 2011 and that board member should respond to you before going to the ED. When the board member contacts you back is the point that you should disclose that ED is purporting to help you get another job.

Good luck, and be careful!
posted by Jon_Evil at 3:06 PM on April 11, 2011

Even if you write the checks, definitely don't sign them. As oneear says, these are different roles. So, bring them to someone else to sign (the ED, the treasurer, the Board chair). This is a designated role, so just ask, "who are your check-signers?" Presuming it isn't the ED, that person is likely also the person to ask your questions.

When you raise it with a board member, minimize the drama by trying to find the right person up front (treasurer, chair of the finance committee, or board president). Do raise it as a question. This does sound shady, but I have seen interns act like they're busting corruption in situations that are not corrupt, and it's a bit embarrassing.
posted by slidell at 3:40 PM on April 11, 2011

Yeah, that sounds like inurement.

I'm an ED for a 501(c)(6). Echoing others, having a volunteer write checks isn't just irregular, it's fucked up.

As to what you should do, I can't answer that without more info. How big is the staff? Who signs the checks once you've written them? Does the charity have auditors? How big is the board? How tight are they with the ED? Are you able to review their most recent 990?

Not incidentally, the world needs more volunteers like you. Seriously.
posted by Short Attention Sp at 5:16 PM on April 11, 2011 [1 favorite]

*Writing* the checks is no big deal. Many places actually PAY for a machine to do this, much cheaper to get a free volunteer to do it.

The rest is fishy and should be reported. Don't sign the checks as you or as anyone else.
posted by gjc at 5:49 PM on April 11, 2011

Even if you write the checks, definitely don't sign them.

Just chiming in to say that if you DO sign the checks, then it's even worse than you think. No one who writes the checks in a non-profit should ever sign them! And having a volunteer as a signer on the account is so utterly irresponsible that I would highly recommend you get out of there pronto. If they really are a 501(c)3 then they are required to have a board of directors. Go to them immediately with what you know.
posted by The Light Fantastic at 7:49 PM on April 11, 2011

« Older To Diagnose Autism, or Not to Diagnose Autism...   |   Brooklyn engagement shoot Newer »
This thread is closed to new comments.