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How does it happen that a nonprofit organization that is admired and respected can lose the public’s trust almost overnight? Or, as in the case of ECHO Housing in Evansville, Illinois, literally overnight? As recently as March 2018, ECHO Housing was known for helping people have safe places to live. Suddenly, it was revealed that the executive director had done something wrong—possibly illegal—and it all fell apart. (For a detailed look at the case, please review NPQ’s article from September.) What has happened between that moment and now teaches a lesson in what not to do in response to such situations, and then offers a path toward regaining that trust.

In March, a story broke in the Courier & Press that the executive director of ECHO Housing, Stephanie TenBarge, had used company money to pay her own property tax. As the scandal came to light, an ordinance was forwarded for consideration by the Evansville City Council to withdraw all public funding from ECHO, which receives a good sum of government money deliver on its mission to “create affordable housing, provide supportive services, and promote community development.” Interim Director Chris Metz spoke eloquently about the danger this would pose to people who are already at risk: the veterans and people with low incomes who buy the houses that ECHO rehabilitates. The ordinance was tabled, but has been brought back for consideration twice—once in September and then, again, this week—before being subsequently defeated, meaning ECHO Housing can have its money without restrictions.

The City Council’s repeated pushing of that ordinance suggests they lost trust in the organization. That kind of loss of faith takes time to unfold, and happened in a series of intermediate steps:

  • Before any accusations came out, TenBarge resigned from her role as executive director without comment. It’s an act that many would consider odd after several years of service with an organization people respect. Then came the March 2018 revelation that TenBarge had potentially misappropriated funds—which, of course, explained the resignation.
  • The police wanted to look into this, but according to a statement by the Evansville Police Department (EPD), ECHO refused to share information about what was taking place, despite many requests. The board president even refused to comment.
  • An EPD police officer who had served on ECHO’s board for a year turned in his own resignation, saying in a letter to the board that he had been asked to ignore his oath as an officer for the good of the board. Naturally, this is something he refused to do.
  • Six months later, in September, following the opening of an investigation by the EPD, another article confirmed the persistence of the wall of silence. No one was saying anything, including Metz, who even refused to name the people currently sitting on the board. Reportedly, an audit in the works would have revealed what happened and where the public’s money went, but it was never released. ECHO claims this is at the request of the EPD, who were still conducting their investigation.

In a statement captured in a video from September, the police officer who announced the investigation stated several things that lead us to where trust was lost.

  • The implication is that, “These funds are from taxes, so it is our money.” Accordingly, we have the right to know how it is being used.
  • Since ECHO did not respond, the investigation had to be started with “society” listed as the victim and ECHO as an involved party. The officer said it would have been preferable if ECHO had cooperated and could be listed as the victim, and TenBarge as the suspect. (This change was made later, and Metz used it to defend ECHO.)
  • It is not fair to other nonprofits that receive funding and try to do the right thing to let one organization say “dismissively” that everything is being dealt with internally and we can all move on.

In other words, the actions of the organization over those six months eroded trust in the organization as a whole.

Transparency, honesty, and a willingness to share what was going on might have turned the tide of opinion in a more favorable direction, and that is eventually what happened. Metz appeared before the council four times, explaining what the organization was doing to protect the public’s money. NPQ’s earlier newswire detailed these steps, and though some of them seemed like an overcorrection to us at the time, those lengths may have been what was necessary to start the rebuilding of trust.

It should be noted that this trust is not unanimous on the Council, nor is it absolute. Some who voted expressed reservations that since the audit had not yet been released, many questions remain about what happened in the past. However, some of the changes proposed have already been made, including one suggested by NPQ—to go with an external accounting firm.

But scandal should never go to waste. Instead, it can be mined for tips about what to do and not do in other similar cases. In Milwaukee, there’s a report of misappropriation of funds by another executive director, and now trust in that organization is crashing. It was just announced that the United Way of Greater Milwaukee and Waukesha County is suspending funding to UNISON due to their lack of an audit. Maybe UNISON can learn from ECHO. And, in case they need a playbook, this article by Kim Klein about how to communicate during a crisis is still the best guide for nonprofits who find themselves in such positions.

Author: Rob Meiksins
Source: Nonprofit Quarterly