August 6, 2014 | Read Time: 4 minutes
We are writing in response to Joan Garry’s opinion piece entitled “After a Nonprofit Financial Crisis, the Board Needs to Step In,” which referenced a recent financial loss at Greenpeace International.
We want your readers to know how seriously we take Greenpeace International’s recent financial situation, and how Greenpeace enacted the very things Ms. Garry advises boards and CEOs to do during these times.
As the article advises, the board, management, and staff need to take responsibility together. And at Greenpeace we did just that in the recent case.
Allegations concerning the staff members who improperly entered into foreign-exchange contracts to minimize the risks of a weakened Euro (Greenpeace International shoulders the burden centrally of currency fluctuations for Greenpeace entities that operate in 15 currencies) were reported to the Greenpeace International board treasurer, who took action immediately. He directed the Greenpeace International internal auditor to investigate the issue, and the two employees involved no longer work for the organization.
The board of Greenpeace International commissioned a global accounting firm, KPMG, to undertake an independent and augmented audit. This has been completed and we have received a clean “unqualified” audit. A separate internal audit and review of all relevant financial control protocols, procedures, and policies is also in progress. Under the guidance of a new global finance director, a number of changes are being implemented to improve our systems and prevent such a mistake from occurring again.
In addition, Greenpeace International commissioned a separate independent forensic investigation into due diligence with regard to whether any personal benefit had been gained from the foreign-exchange incident. Preliminary indications are that no one benefited personally from these foreign-exchange contracts. The full investigation is expected to be completed by next month.
Here’s how we respond to the points Ms. Garry urged nonprofits to follow.
First, be honest and transparent with your donors and staff members. Honesty is the best policy, plain and simple. Yes, $5.2-million is a big number for any nonprofit organization. We are forever grateful to the millions of people around the world who have donated their hard-earned money to Greenpeace to support our campaigns to protect the environment. In order to absorb the loss, we did not cut any campaigns on critical environmental issues. Instead, we focused on postponing infrastructure investments and non-campaign-related activities, such as:
- Cancelling an IT project and management-information-system project.
- Reducing contingency budgets.
- Compensating through under-expenditure, due to staff vacancies and associated overheads.
Through these measures, Greenpeace International is aiming to save approximately $9-million to $12-million over the next three years in order to recover the foreign exchange deficit of $5.2-million and to provide for the normal foreign-exchange losses from operating in 15 different currencies.
Greenpeace International had appropriate levels of reserves to cover unforeseen risks, and these funds were used to cover for a part of the loss related to the currency exchange. Savings are planned for the future to restore reserve levels sufficient to cover future risks and ensure sufficient working capital.
Second, ensure the board’s critical oversight capacity.
At Greenpeace USA, we hold a mandatory financial-literacy training for every board member, new and incoming. We invite every board member to join the finance committee because we all share in the organization’s fiduciary responsibility. In addition, board members serve on a separate 990 review committee, a financial-investment committee, and an audit and risk-review committee.
The Greenpeace International board’s audit committee (finance committee), under the board treasurer’s leadership, provides oversight of the financial management of Greenpeace International; approves annual budgets and the triennial global-resources plan; receives the annual accounts and the auditor’s report; and approves the management accounts. In addition, the committee approves the internal audit program of activities; receives the internal audit recommendations; and ensures that management follows up on agreed responses.
The main task of Greenpeace’s national and regional boards, as well as the Greenpeace International board, is oversight and not fundraising. Our boards meet regularly throughout the year, and we have continuous interaction with our executives. Boards are evaluated, and we conduct annual 360-degree evaluations of our executives. We take our judiciary and legal obligations very seriously, and the recent exchange-rate loss has therefore has been handled with the highest priority by the Greenpeace International board.
Finally, communicate early and often—through both board and staff messengers.
This is absolutely essential advice and a critical practice. During the period in question, Greenpeace International staff and board members reported regularly via updates on a roughly biweekly basis to the executive directors of the 27 national and regional offices around the world. We have nevertheless learned a lot through this incident on how we need to improve our internal communications.
While Greenpeace is a truly global organization, it is important to note that the financial loss at Greenpeace International has absolutely no impact on the financial stability of Greenpeace USA or any other national and regional office.
Ms. Garry’s piece clearly provides a cautionary tale for organizations that experience a financial crisis, coupled with sound advice on how to address such a crisis. Thankfully, Greenpeace enacted these very steps well before the article’s publication.
Karen Topakian
Board Chair
Greenpeace Inc.
Ana Toni
Board Chair
Greenpeace International
