Association for Managers of Volunteers Collapses In Debt

The most prominent organization representing managers of volunteers, the Association for Volunteer Administration, in Richmond, Va., is closing its doors amid allegations of embezzlement by a staff member, the dismissal of three employees (including the executive director), and the accumulation of more than $250,000 in debt.

The police unit that oversees Richmond has conducted a criminal inquiry and last month concluded that no criminal activity had occurred. Nevertheless, Keith Seel, treasurer of the association’s board, said a forensic audit is under way to determine how the organization’s funds were spent.

“We want to know where the money went,” said Mr. Seel, who also serves as director of the Institute for Nonprofit Studies, at Mount Royal College, in Calgary, Alberta.

Mr. Seel and Ellen Didimamoff, who is president of the association’s board and director of volunteers at Morris View Nursing Home, in Morris Plains, N.J., said the organization had suffered under the leadership of John R. Throop, the association’s executive director.

They said that he had ceded bookkeeping responsibility to an employee who was not trained in accounting, and that he spent too much on his own travel.

The association’s annual conference, normally a revenue generator, lost more than $120,000 last year, according to Mr. Seel. In addition, the association’s office manager was also being paid as a database manager, he said, but those payments were not processed through payroll nor reported to the Internal Revenue Service, which forced the association’s auditors to make more than $27,000 in payroll-tax adjustments.

Mr. Seel also alleged that Mr. Throop had inadequately documented his credit-card expenses. On a visit to the association’s offices after Mr. Throop’s dismissal, Mr. Seel said, board members found “credit-card receipts just stuffed into files.”

Counterallegations

Mr. Throop, who denied any wrongdoing by him or other members of the staff, said that his credit-card expenses were documented, and that the association’s office manager also kept records of credit-card spending. “I’m not sure where that problem was,” he said.

Before being hired as executive director, Mr. Throop had served as a consultant to the association on management issues, including developing a new governance structure.

He also said the board never gave him an opportunity to respond to allegations. Mr. Throop said he learned of the criminal investigation through an electronic newsletter distributed by Energize, a consulting group in Philadelphia that specializes in managing volunteers.

“The advice of the lawyers at that time was to let the police do their work and they would contact him in the course of their investigation,” said Mr. Seel.

In response to Mr. Throop’s contention that he was not given a chance to respond to the board’s allegations, Mr. Seel said, “He was given plenty of opportunity to give me correct information” about the budgets for September, October, and November 2005, and offered no explanation for the problems with the financial data.

At the association’s November conference, said Mr. Seel, Mr. Throop blamed the problem on the office manager’s having input financial information incorrectly.

Growing Pains

The 2,400-member Association for Volunteer Administration, which was founded more than 40 years ago, had attempted to expand in recent times, board members said, with a growing annual international conference, a popular program to certify the professionalism of people who manage volunteers, and plans to increase its international exposure.

“It’s an organization that for much of its history had been solvent but not real secure,” said Nancy Gaston, whose two-year presidency of the association’s board ended in November. “It didn’t have the financial reserves that a nonprofit should have.”

But the problems that led to the closure far exceeded any previous financial troubles, said Ms. Gaston, who is a Vancouver, Wash., consultant to groups that need help training and managing their volunteers.

In the past two years, the organization had also faced staff turnover and administrative shuffling. The organization had no permanent executive director for a year before hiring Mr. Throop in January 2005.

In its fiscal year ending June 30, 2005, the association made several organizational changes: moving to an electronic accounting system, instituting a sliding fee scale for annual membership, and adopting a new governance structure, in which the board delegated more day-to-day management responsibilities to the executive director.

Mr. Seel and Ms. Didimamoff said the association had seemed in good financial health until troubling signs appeared late last fall, in the financial audit for the association’s 2005 fiscal year. The group had $127,000 in assets in June 2004, $41,000 in assets a year later, and folded with $259,000 in debt, Mr. Seel said.

“At the point of his [Mr. Throop’s] hire, the organization was showing a surplus budget,” he said. “We were in the black.”

And when the 2005 audit was begun last July, Mr. Seel said, the board was receiving positive financial reports from the executive director. “There was absolutely no flag coming to the board that there was any concern.”

Mr. Seel said financial statements through October 2005 that Mr. Throop gave to the board in November were “riddled with errors.”

The statements, he said, were a bad omen: “For it to get that bad meant that the executive director was basically not paying attention to the financial situation.”

Pressure to Expand

Both Mr. Seel and Mr. Throop agreed that, as the organization sought to expand, the board expected the executive director to spend a lot of time traveling. But they differed as to whether Mr. Throop abused that understanding by traveling too much and to destinations unrelated to association business.

Mr. Throop said he was working under authority from the board to expand the number of members and the financial resources of the association and to bring it a higher overseas profile. International trips he made, including travel late last year to China, Hong Kong, and Mexico were authorized “as part of my general plan in terms of our international business,” he said.

The plan, he said, was to strengthen connections with national organizations overseas to persuade them to become affiliates of the U.S. association. In some cases, he said, as in the trip to China, some expenses were paid by groups who played host to him overseas.

“I feel like I’m being nailed for doing this kind of work to expand the organization and bring in money quickly,” Mr. Throop said.

Mr. Seel said he could not comment on the appropriateness of travel because the association is still investigating the business reasons for trips not expressly approved by the board.

He noted that, in some cases, trips were not paid for by sponsors, as Mr. Throop had said they would be. “We were told one story and then got the bills,” Mr. Seel said.

Bookkeeping Woes

Mr. Seel said that travel costs were not the only concern; he said Mr. Throop had wrongly spent money that donors had earmarked for specific purposes.

Mr. Throop called the use of restricted funds accidental and said he and his staff members were trying to correct bookkeeping problems that predated their employment at the association.

“There were problems going on that I became aware of pretty late in the process,” Mr. Throop said. “If I had known the nature of this problem, I would have addressed it a lot faster.”

He also said he could not solve some problems because the association was understaffed. (The staff included four full-time employees in addition to Mr. Throop, who worked with the help of five consultants.)

“There was just an enormous amount of activity going on,” he said, leading up to the association’s November 2005 conference in Jacksonville, Fla. “We just did not have sufficient help.”

Mr. Throop estimates the budget shortfall resulting from the conference at $90,000, which he blames on the failure to win expected sponsorships and grants: “It had nothing to do with mismanagment. It had everything to do with money that was promised that never came.”

The association’s board has taken steps to transfer the organization’s Journal of Volunteer Administration to another nonprofit organization. North Carolina State University, in Raleigh, is considering whether to acquire the journal.

The association is still considering plans to preserve its Certified Volunteer Administrator credentialing process.

Hard Lessons

Association for Volunteer Administration board members expressed optimism that another group would take the association’s place, and hope that other charities would avoid similar trials.

“I wouldn’t want to see what happened to our organization happen to another nonprofit,” Ms. Didimamoff said.

Susan Ellis, president of Energize, and a 30-year member of the association, said another lesson to be derived from the association’s downfall is the importance of keeping the organization’s members well informed.

Until late last year, Ms. Ellis said, members received what she called “incessantly perky” communications from the board, and were given no opportunity to weigh in on whether the organization should disband.

“I am appalled that an organization that’s been around for more than 40 years should have dissolved as a shock to the members,” she said.

“I don’t think anybody on the board sat him [Mr. Throop] down and asked what was going on,” she added. “I’m not accusing anybody of any intent to do wrong, but I do accuse them of being nontransparent.”

But Jackie Norris, president of the association in the mid-1990s and currently director of Metro Volunteers, Denver’s volunteer center, said she trusts that the board made the right decision.

“It’s always challenging for a national board to communicate with the membership so that everybody feels fully informed,” Ms. Norris said. While the board perhaps should have questioned Mr. Throop more thoroughly when he presented finanical data, she said, “the board needs to trust the executive director to do what they need him to do. If the executive director abused that trust, then shame on him.”