Who’s Your Nonprofit’s Chief Trust Officer?

Printer-friendly version

By Virginia Turner, a Senior at Ohio State University and the National Council of Nonprofits’ Fall 2015 John Glenn Fellow

In early September, I attended a presentation titled “Somebody’s Watching Us: Considerations for Nonprofits Operating under Increased Government Scrutiny,” hosted by Venable LLP, a law firm in Washington, D.C. We heard from Yael Fuchs, the Assistant Attorney General for the Charities Bureau at the New York Attorney General’s Office. Fuchs spoke from a regulator’s perspective about the increased government scrutiny of nonprofits and the importance of internal controls. Deficiencies in internal controls can lead to misrepresentation of financial reports, diversion of assets (embezzlement, waste, imprudent investments), and ultimately - abuse of donor’s trust. Fuchs believes the most common cause of failure to adopt or follow internal controls is a failure of oversight, i.e., board governance. How can nonprofit boards in particular make sure a nonprofit is following its own policies, and earning donors’ trust?

According to Fuchs, one answer is that every nonprofit should designate someone to serve as its “Chief Trust Officer.” She shared that one of the first questions the New York Attorney General asks nonprofits under investigation is: “Who is in charge of your compliance function?” Fuchs referred to this responsibility as the “Chief Trust Officer.” She emphasized the importance of having a person specifically delegated to protect the organization’s integrity. The Chief Trust Officer can be responsible for making sure the organization is in compliance with all laws, rules, and regulations but also responsible for constantly asking, “Are we worthy of the public’s trust? What can we do to be even more transparent and accountable?” Fuchs also stressed that it is crucial for nonprofits to enforce their policies, and not just simply have them in place. A Chief Trust Officer would ensure internal controls are followed, and that the nonprofit respects donors’ expressed intentions and restrictions on contributions. In return, fewer oversight failures would occur, and the nonprofit would be acting in a manner deserving of the public’s trust.

One of the attorneys from Venable, LLP, Eric Berman, observed that regulators are “beefing up” their investigations, and nonprofits should take this heightened security into account.  (See our companion blog “Phantom Boards and Bobbleheads”) In a recent report issued by the IRS about its priorities for the coming year, the IRS TE/GE Commissioner similarly noted that the IRS exempt organization unit will be using data from filed IRS Form 990s to focus its examinations.

This notice means that it’s increasingly important for nonprofit board members to closely review the IRS Form 990 before filing to make sure the return is accurate, and fully reports the financial status of the organization. The Chief Trust Officer can be the one leading the way towards full board review of the 990 prior to filing.

Identifying who will serve as your nonprofit’s “Chief Trust Officer” is a strong start - empowering everyone at the nonprofit: volunteers, board members, and paid staff, to ask “How can we be even more worthy of our donors trust?”

Who’s your nonprofit’s Chief Trust Officer? 

Read more about nonprofit accountability from the National Council of Nonprofits.

Resources

Categories: 
Find Your State Association of Nonprofits

Find Your State Association of Nonprofits

Connect with local resources and expertise

Find

Connect With Us

1. Sign up for updates

Stay up-to-date with the latest nonprofit resources and trends by subscribing to our free e-newsletters.

2. Follow us on social media