Charitable organizations are supposed to be based on philanthropic goals as well as social well-being. It is also proof that there is still a bit of faith in humanity and that there are still people caring for others. It is sickening to think that people responsible for your favorite charity may be capable of fraud, but the reality is that more and more organizations are falling victim to this.Taking advantage of someone else’s misery for self-gain can come in many forms; from stealing cash to misusing charity credit cards. Finance departments (and the staff running them) should be audited regularly to avoid this.
However, what to do when the culprit is the highly respected and highly profiled charity founder? Console, a well-known non-profit organization, offers counseling services to suicide risk patients at different locations across the UK and Ireland. They are currently under investigation by the HSE (Health Service Executive) for financial irregularities. In the hot seat and man of the hour is founder Paul Kelly; who is one of the highest-profile spokespeople on the subject of suicide, and who established Console in 2002 after his younger sister took her life. Should evidence be found that the rules have been broken, Console can be stripped of its charity status.
Mr. Kelly voluntarily stepped down and denied any wrongdoing on his part, even before a Prime Time Investigation special aired claiming that Console paid its directors €215,000 which is in breach of NGO regulations. When applying for state grants and tax exemptions, the charity adjusted accounts to exclude references to directors’ pay and other benefits. As per Revenue Commission rules, there should be a minimum of three Officers, Trustees or Directors, who are not related and independent of each other. The charity’s directors, however, were made up of Mr. Kelly (founder), his wife Patricia Kelly, who used her maiden name Patricia Dowling (making it less obvious that the directors were related) and two immediate family relatives. The console also listed people who were not even on the board as directors, including former Independent Senator Jillian van Turnhout.
Up to €500,000 worth of spending, including trips to New Zealand and Australia, is under critical investigation. Two luxury cars (a Mercedes and an Audi) were acquired by the charity, the purpose of which is not entirely clear or makes any sense at all. Other costs include purchases such as groceries, clothes, and flowers billed to the charity’s credit cards. According to sources, the internal audit was the “biggest” and “most challenging” undertaken by the HSE so far. Console has received more than €12m from the State, public fundraising and donations in a nine-year period, including €3.4m from the HSE. According to 2014 accounts, the charity received €817,000 in HSE grants that year and over €1m from fundraising and donations. Mr. Kelly received “consultancy fees” of €81,528 in 2014 and €90,066 in 2013.
It makes you wonder who ran the finance department! Obviously, the purchasing procedures, or the lack thereof, failed the entire charity miserably in terms of transparency and preventing fraudulent activity. Procurementexpress.com (as used by UNICEF Ireland) is popular amongst nonprofits because the overall consensus is that the spend visibility is out of this world and for the speed and accurately in which data can be made available. Procurementexpress.com is all about the spend and relevant documentation like invoices or receipts can be added to the system and linked to the relevant purchase order, so everything associated with a purchase stay together.
Spending is the main area of investigation in an audit for charities and legislation requires that charities spend the income they receive for achieving their charitable purpose within a certain time. Thus it makes sense to ensure that all spend is controlled effectively and that accurate records of all transactions are kept ready to be reviewed and reported on. Procurementexpress.com is customizable so you can decide what to report on and match your optimal purchase approval rules. The system also makes it easy to spot rogue spending, duplicate invoices, and even bogus invoices. The main attraction for finance is reporting though. The spend transparency is usually enough to warrant having a system in place, but the .csv downloads really make reporting a breeze.
Every company deserves peace of mind when it comes to purchasing transparency. NGO’s though, have a responsibility, not only to the directors but also to the public. This is a serious issue and one that should be taken as a lesson to all NGO’s.