Just how accountable is a nonprofit for overseeing what is done by another organization on its behalf?
The Minnesota Attorney General thinks the answer is "fully accountable". Many of you may be aware that the big chain "privately owned" thrift store "Savers" acquires its product offerings, clothes and other goods, from charities who have received these items initially as donations as well as directly when it promises then to make a contribution to the charity identified by the donor. The charities in turn "sell" these items to Savers who then puts them on its shelves. This arrangement reduces can need by charities to be in both the collection and distribution business while still being able to raise funds. In many locations, Savers has been a very effective fundraising vehicle for the likes of some pretty big and small charities.
But in Minnesota it appears that Savers has not fulfilled its contract or at least misrepresented its contract by keeping more of its income over dispersing it back to the charitable sources. The Minnesota AG is holding the charities equally responsible for Savers' failngs because donor's intent is not being honored (my minimalist interpretation).
So, a good lesson: when a nonprofit makes a deal with another organization, it retains its obligation to protect the interests of the donor as well as its own reputation. From a governance perspective, nonprofit boards should establish poicy that is clear about the types of arrangements staff will make, what oversight should include, and what types of benefits and when lines are crossed.
For the full story, here's a link to the New York Times.