Nonprofit Fraud and Reputation Repair: How to Rebuild an Organization'sTarnished Reputation

• In Event: Governmental/Not-For-Profit 1

Abstract

ABSTRACT

Nonprofit organizations are at an increased risk for the occurrence of financial fraud due to the trusting nature of these organizations as well as limited resource availability for fraud prevention measures. Because nonprofit organizations rely on the public’s perception of their inherent goodness for their funding and continued operations, it may be difficult or impossible for a nonprofit to remain financially viable once fraud occurs. In this study, we surveyed potential donors to see what actions improved the likelihood that they would contribute to a nonprofit organization following a material fraud. Modifying and enhancing the board of directors had the highest and only statistically significant positive effect on potential donations. Moreover, firing an Executive Director, who was not directly involved in the fraud, reduced both the likelihood and amount of planned giving, possibly because donors thought that the problem was much more extensive if this action was deemed necessary.

Authors

• John A Brozovsky, Virginia Tech University

• John Lauck, Louisiana Tech University