By Renee Zau, Co-founder of DonationMatch

Seven years ago, we at DonationMatch had a brush with the law. It’s a good thing, as it highlighted how our system uniquely protects nonprofits AND businesses and made us even more committed to our policies that minimize fraud. Here’s what happened.

THE CASE

On August 12, 2015, our staff was contacted by an Investigator at the San Diego District Attorney’s Office who told us he was working on a criminal case involving the former CEO of a local nonprofit. The former nonprofit CEO had already been charged in July, 2015 and pleaded not guilty. DonationMatch was linked to the case through system emails sent to the former nonprofit CEO. The investigator wanted to know—did we have information regarding donations that had been solicited and given to the former nonprofit CEO for the nonprofit’s recent event?

The answer was yes, of course—records of all requests, offers, responses, and even copies of donated vouchers and tickets received from our network were automatically saved by our system. Through a subpoena, the San Diego DA’s Office now had access to them, too.

WHAT DID THEY FIND?

The San Diego DA’s Office was able to see a list of all donations that were given to the former nonprofit CEO by businesses through DonationMatch. Using the contact information saved in our system, he reached out to each business involved to find out whether donated gift certificates had been used, and by whom. As suspected, it was discovered that the former nonprofit CEO had, “…solicited items and gift cards from stores as donations to auction off at fundraisers, but she would instead use them herself.” Some businesses recognized her photo and contact details, even when a fake name was used.

TIMELINE

July, 2015: Former nonprofit CEO pleaded not guilty.
August, 2015: DA’s Office investigator contacted DonationMatch and received DonationMatch records regarding donations approved to the former nonprofit CEO’s account, which were subsequently investigated further with each donor company.
September, 2015: Former nonprofit CEO changed her plea from “not guilty” to “guilty” of grand theft.
December, 2015: The former nonprofit CEO was found guilty and sentenced.

Ultimately, presumably due to the new evidence discovered, the former nonprofit CEO decided to plead guilty and was sentenced to a year behind bars, five years of probation, and restitution payments totaling $18,000. [Link to NBC News article]

WHAT DID WE LEARN? COULD THIS HAPPEN TO YOUR ORGANIZATION?

Leaders of organizations, especially CEO’s, typically have a lot of independence when it comes to making decisions and working with partners and donors. In the wrong hands, or simply at an opportune time, bad decisions can be made. EVERY organization has the potential to fall victim to crime, but it is the responsibility of all stakeholders to do their best to be alert and ensure there are checks and balances whenever possible and practical.

TAKEAWAYS FOR NONPROFITS:

Do criminal background checks when hiring, especially when access to bank accounts is possible. The former nonprofit CEO had past brushes with the law.
Share about current donation solicitation efforts and ways to contact your organization to verify requests clearly on your website.
Create a shared/group organization email address monitored by staff for event volunteers to use when soliciting donations.

Let the public know that only those using official organization email addresses should be soliciting donations. This helps to prevent your organization’s EIN and/or name from being used to solicit donations without your knowledge.
Utilize trackable methods of donation solicitation whenever possible. Come up with a reason for donors to let you know they donated, such as inviting businesses to send their preferred Business Name, website URL, and social media handles to your event committee/shared email address.
Invite in-kind donors to events: This proactively deters theft and misuse when donors attending will expect to see their own packages presented. It also potentially increases your supporter base.Nonprofits need to address potential fraud in order to protect their organization’s reputation, maintain their ability to qualify for desired donations, and accurately provide tax receipts for donations and in-kind donation reporting on state tax returns.

TAKEAWAYS FOR BUSINESSES:

When we at DonationMatch check a contact’s authority to solicit donations when an account is created, only 85% pass this test. When businesses not using DonationMatch aren’t vetting solicitors themselves, it could mean donated items meant for fundraisers do not show up at events. How do you prevent this?

Know who is asking you for a donation: If you don’t know them personally, ask for credentials and verify them. Legitimate contacts should be glad you did.
Use trackable methods to donate: Customize vouchers or gift certificates with recipient organization information and dates, and give them to organizations’ employees or leaders directly. Collect contact information when redeemed. Drop off physical products directly to a charity’s office and let multiple contacts know to expect it.
Attend events yourself: Not only can you see and give feedback about how your donations are presented, but events are great opportunities to meet others in the community who care about the same causes.
If you donate to more than one event a month, consider using a platform like DonationMatch that automatically vets all applicants, e-delivers donations you approve to only vetted accounts, and creates trackable gift certificates/tickets/vouchers for you. And if event plans change or (knock on wood) special circumstances arise, it’s easier to know who donated and reach you.

We at DonationMatch were very glad to hear that in this 2015 case, records from our system in 2015 provided evidence to serve justice and help the affected nonprofit recover what it could. Our hope is that with awareness and more vigilance by donor companies and platforms that enable donations, this type of theft will no longer exist.