Whistle-blower policy as part of Employee Handbook

What if you have a research associate or a database entry person who gathers information that lead him/her to the conclusion that something untoward and possibly illegal is going on in your nonprofit organization? What are you going to do about that if this person decides to “blow the whistle” on whatever practices are being observed?

I don’t know about your situation, but in all the situations in which I have worked, and in the organizations of many clients over the past ten years, the answer would have been simple: They would have been fired on the spot, and their concerns would have been buried, the issues forgotten and whatever the questionable practices that were done would be continued.

Sad, but true. Let's face it: many nonprofits are just as stubborn as businesses in publicly admitting fault. Everything they do has got to seem like it’s just the very best thing that could, should or ought to happen. But we know a different story: board members and executives of nonprofits, seeing no directly imposed standard of public accountability, have come to feel as if they operate independently and without accountability. What they do is “nobody else’s business.”

That’s the attitude from the top that I have experienced in many nonprofits over the years. Therefore, whatever they do is “right.” The fact that they do it makes it so. And their public face will always seek to justify whatever’s going on as being the truest, best and most appropriate thing that could be done. In other words, the boards and executives of charities tend to paint themselves as correct and infallible.

But this situation is changing, gradually. And it’s being helped along by the Sarbanes-Oxley Act. One of the sections of that Act has to do with whistle=lowers – those who “blow the whistle” on bad or harmful or illegal practices. Often they have been fired for their trouble. But no more. Now the organization has to listen to them and has to act on their statements and accusations, whatever they are. And this is coming to nonprofits, too, and not a moment too soon, in my opinion.

Sarbanes-Oxley is raising the issue of public accountability for nonprofits for the first time really since the Senator Joseph McCarthy era. In the 1950s and 1960s there was considerable unrest in Congress about foundations and how and why they were set up an managed. Today we’re seeing a broadening of that accountability concern about nonprofit public accountability.

So, what is your organization’s whistle-blower policy? What would you put in one if you decided tomorrow you should create one? How does a nonprofit organization publicly declare that it has made a mistake?

Here’s some recommendations from Board Source and from Independent Sector in their report entitled “The Sarbanes-Oxley Act and Implications for Nonprofits.”

“Nonprofits must start by protecting themselves. They must eliminate careless and irresponsible accounting practices and benefit from an internal audit that brings tolight weak spots and installs processes that are not vulnerable to fraud and abuse.

“Written policies that are vigorously enforced by executive staff and the board send a message that misconduct is not tolerated. These policies should cover any unethical behavior within the organization — including sexual harassment.

“Each organization must develop procedures for handling employee and volunteer complaints, including the establishment of a confidential and anonymous mechanism to encourage employees and volunteers to report any inappropriateness within the entity's financial management. No punishment for reporting problems — including firing, demotion, suspension, harassment, failure to consider the employee for promotion, or any other kind of discrimination — is allowed. Even if the claims are unfounded, the organization may not reprimand the employee. The law does not force the employee to demonstrate misconduct; a reasonable belief or suspicion that a fraud exists is enough to create a protected status for the employee.

“RECOMMENDATIONS
Nonprofits must develop, adopt, and disclose a formal process to deal with complaints and prevent retaliation.

“Nonprofit leaders must take any employee and volunteer complaints seriously, investigate the situation, and fix any problems or justify why corrections are not necessary.”

Here’s the link.