When I worked as a program officer for a foundation one of our grantees got into trouble with the IRS. They had not paid their payroll tax for several years and the Federal Government was not happy. We, as significant funders were not happy either. But as disappointed as we were in the grantee we didn’t want their administrators to go to prison because, when their bank account was running low, they made very bad decisions about which bills to pay.
I was reminded of this episode when I read this horrific story in The New York Times.
The bookkeeper for Healing Arts Initiative, a $5m New York City non-profit arts organization is now in jail awaiting trial on charges of embezzlement. But it gets worse. Much worse. This bookkeeper, and several accomplices, are also implicated in vicious acid attack on the non-profit’s executive director who uncovered their scheme.
The story is sordid and when the final reckoning is done I am sure there will be lessons here about Board oversight and internal financial controls but most immediately is the stark, and awful, reminder that just because an arts non-profit has a charitable mission and, for the most part, attracts mission-minded employees, it is still a business and when the budgets get big enough the temptation to steal can be irresistible.
Of course the focus of leaders and governors of cultural organizations should be on creating and making accessible extraordinary arts experiences. But along the way it’s important to ask a few basic questions:
- Who is really minding the store?
- Are we operating transparently when it comes to our finances?
- Do we have enough checks and balances?
- Are enough Board and Staff members trained well enough to ask the right questions?
- If we don’t have the financial skills ourselves to keep pace with the growth and increasing complexity of our business, do we know where to get them?
- Are we too trusting?
The Healing Arts case is, fortunately, a pretty wild anomaly. But if one works in the non-profit cultural sector long enough one almost certainly has a few stories to tell about organizations committing acts of financial malfeasance and the negative chain reaction it caused. The perpetrators may be relatively easy to reprimand or if necessary remove; but the damage these cases do lingers.
The organization gets a bad rep and that sinks internal morale and costs them external support. Tensions between Board members and staff leaderships escalate. Most importantly, the communities who depend on these organizations doing their best work are short-changed.
There are far more good apples than rotten ones but when precious resources intended to support noble ends are stolen everyone loses.