May 16, 2002 | Read Time: 3 minutes
Officials of one of the nation’s largest United Ways have tried to put an end to nearly a year of controversy by releasing an audit that looked into allegations of fiscal abuses originally raised by a former board member in July.
The audit of the United Way of the National Capital Area, in Washington, found no evidence that either the organization’s officials or its consultant had improperly spent United Way funds. But it also determined that the organization lacked proper controls over several financial practices. For example, it did not require competitive bidding on large contracts and did not keep adequate records of employee expenses, the audit said.
Several board members said they hoped the United Way’s managers had learned a fundamental lesson: that nonprofit organizations need to be as open as possible in dealing with both boards of directors and the public. Much of the controversy was fueled by the belief among several board members that senior managers and the board’s leaders had withheld information from them.
Keeping boards informed is critical, say experts on nonprofit management, because boards have an ethical and legal obligation to make sure groups are carrying out their missions and managing their finances properly. Said Judith O’Connor, president of BoardSource, a Washington group: “The board has to be informed enough to make judgments about whether the actions will be illegal, unethical, or simply damage the reputation of the organization publicly.”
‘Need for Transparency’
Anthony J. Buzzelli, chairman of the Washington-area United Way’s administration and finance committee, said at a news conference: “If there’s one lesson I’ve learned from this process, it’s the need for transparency.” Mr. Buzzelli, managing partner of Deloitte & Touche’s Central Atlantic office, has been criticized by some board members, who allege that he did not keep them adequately informed about certain contracts and expenses. “The lack of transparency raises questions by the media,” Mr. Buzzelli said. “It raises questions by the board in doing its job.”
After a meeting last week at which the board reviewed the auditors’ report, William H. Bozman, a board member who last October asked that the audit be done, said he was satisfied that “things are on the right track.” Mr. Bozman said the board’s approval of new requirements regarding bidding on contracts and documenting travel expenses dealt with many of his original concerns.
The controversy has been percolating since former board member Ross W. Dembling wrote a memo last summer citing allegations by some United Way staff members that part of an $85,000 allocation intended to renovate restrooms at the United Way’s office building to make them more accessible to disabled people had instead been spent on refurbishing executive offices. Staff members also complained that the work had not been put out for competitive bid.
The memo also raised questions about a 12-month consulting contract given to the outgoing executive vice president, Oral Suer, in January 2001, along with other spending by United Way executives. The contract, under which Mr. Suer received $6,000 a month, along with money to cover expenses, was approved by a board committee, but some board members said they were unaware of it and thought it was too generous. The audit found that Mr. Suer was paid $9,240 to cover expenses, but that he repaid $1,677 of that. The auditors determined that the amount repaid represented personal expenses.
