Why Oversight Matters: A Tale of Two Nonprofit State Regulatory Systems

Nonprofit Quarterly | July 05, 2018

Why Oversight Matters: A Tale of Two Nonprofit State Regulatory Systems
In an excellent article in Seven Days, an independent Vermont news outlet, Paul Heintz  describes the uneven nonprofit regulation and enforcement systems of various states. Using a few examples in Vermont, Heintz traces the consequences of less well-funded regulatory systems. He starts by describing the frustrations of an attorney who served on the board of an advocacy organization in White River Junction who found it took quite a while for the Vermont attorney general’s office to act on a complaint he filed on the CEO’s unwillingness to open the books to scrutiny by the board. It turned out the executive director had been overpaying herself. “It went on for years without anybody responding to the red flags,” he said, noting the lack of an effective oversight structure. Cindy Lott, who directs Columbia University’s nonprofit management program, says that for now, monitoring and enforcement has “become a state-level issue on a lot of fronts,” and it is often hard to judge the effectiveness of those systems from one state to another. This comment reflects the reality that the IRS is currently seen as being too underfunded and understaffed to do much beyond monitoring by algorithm. But Lott makes the point again that at the state level, enforcement almost takes a community policing approach that involves supportive information, advice, and warnings, along with legal measures. “Enforcement is very difficult to measure,” Lott says. That’s because highly publicized lawsuits and trials capture only a sliver of a regulator’s work. “At times, it’s quiet enforcement,” she said. “They’re not trying to kill off the charity.” When the Vermont attorney general’s office finally did complete the investigation of Emerge Family Advocates, which provides supervision for parental visits in child custody cases with state and federal funding, it showed misdeeds not only on the part of the CEO, but also the board, which “repeatedly failed to provide necessary independent oversight over the organization’s finances.” The attorney general at the time, Bill Sorrell, wrote presciently that such a “failure threatens Emerge’s mission and has put its current funding in serious jeopardy.”

Spotlight

More people in your community want to give to you than you realize. Sometimes they just don’t know how to give,” says Michael Buttacy, Executive Director of Ozarks Teen Challenge. Buttacy says building partnerships with those in your community is a necessity for nonprofit organizations. Connect with local charities and retailers so you can share opportunities for them to support your cause. Buttacy is a Springfield Business Journal 2019 40 Under 40 honoree.


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Spotlight

More people in your community want to give to you than you realize. Sometimes they just don’t know how to give,” says Michael Buttacy, Executive Director of Ozarks Teen Challenge. Buttacy says building partnerships with those in your community is a necessity for nonprofit organizations. Connect with local charities and retailers so you can share opportunities for them to support your cause. Buttacy is a Springfield Business Journal 2019 40 Under 40 honoree.

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