Associations that have experienced embezzlement recommend early and honest communication to maintain trust and support from members.
In 2013, John Durst saw a lot of South Carolina. In his first year as CEO of the South Carolina Restaurant and Lodging Association, he racked up about 1,000 miles on his car every month visiting members in person.
It wasn’t easy work. The year prior, SCRLA had been rocked by the theft of nearly $500,000 by a former employee and the untimely loss of its previous CEO. Durst faced tough questions and some skeptical stakeholders. But it was work that had to be done, because what’s an association without the support and trust of its members? Durst was the new face of a newly rebranded organization, and he wanted to deliver the message “that this genuinely is a new day.”
Durst’s commitment is admirable, and it’s emblematic of the approach taken by all of the association executives who had experienced fraud in their organizations with whom I spoke for “Embezzlement: It Could Happen to You,” in the March/April issue of Associations Now. They all agreed that honesty and transparency with members is a crucial ingredient in a smooth recovery from fraud at an association.
The destructive rumors that are going to go out are far worse than any truth you can tell.
At the Association of American Medical Colleges, members were made aware that a theft had occurred long before it showed up in the news. CEO Darrell Kirch, M.D., says members were informed in two waves: first when a theft had become apparent and the investigation had begun and again, in more detail, once a guilty plea had been entered by the former employee. It was a proactive strategy that, through sharing lessons learned from the experience, also held to AAMC’s mission as an educational organization, says Elisa Siegel, chief communications and marketing officer.
The nature of such investigations, though, will be that early communications with members may need to omit many details, but filling them in on whatever can be shared will minimize rumors and show members the association isn’t trying to hide anything.
“The discussion of handling the messaging should be part of the discussion about handling the crisis situation itself, and the bias should be in favor of communicating as much as possible within the bounds of legality,” says Michael Wyland, CSL, a consultant to associations and nonprofits at Sumption & Wyland. “The reason for that is to maximize the trust that the membership and other stakeholders have in the association by the association being as forthright as it can be within legal limitations, because the destructive rumors that are going to go out are far worse than any truth you can tell.”
When Michele Packard-Milam, CAE, executive director of Mended Hearts, Inc., and chief strategist at Packard Business Strategies, LLC, served on the board of a small nonprofit that lost $100,000 to a rogue staffer, the board informed members about the theft quickly, even though the loss threatened the organization’s viability. “We made the decision that we needed to own it, we needed to let our members know that it was happening,” she says. “For one thing, it was going to influence what we could afford to do at least in the next six months, and a couple of things had to be cancelled, because we didn’t have the money to guarantee that we could cover our expenses.”
Packard-Milam says members were understanding, and the ripple effects were less than the board feared. “We had offers of help from some of the members. It was really good,” she says. “It was a PR nightmare in a lot of ways, but it didn’t create as much of a splash as I thought it might. It didn’t get into the local media, which is probably lucky. We didn’t have anybody who was outraged, other than the board, mad at themselves and mad at the [former] executive director. But we didn’t have any members that were campaigning for heads on a pike or anything like that, luckily.”
At AAMC, Kirch says he heard from just a few members after sharing the news, but those who did reach out were supportive. “In almost every case, they expressed empathy for what we’d gone through, and a surprising number cited their own experience with fraud in their organization,” he says. “The typical message was ‘I’m so sorry to hear this happened. Let me tell you about what occurred here.'”
Durst faced a tougher response, but his personal outreach to members has had positive effects. “It’s been extremely helpful to me not just to discuss how we’re becoming stronger with the members and prospective members, but even more importantly to listen to what they have to say and what their suggestions are, many of which we have incorporated into action here in Columbia,” he says.
Association boards are not known as a risk-taking bunch, nor as swift decision makers. Packard-Milam says boards are also often afflicted with “Too Darn Nice Syndrome.” But when it comes to breaking bad news to members, hesitation may only make matters worse. Instead, as these association pros have suggested, it’s better to just rip off the proverbial Band-Aid quickly. The fear of pain is usually worse than the pain actually turns out to be.
Have you ever had to report bad news (about fraud or otherwise) to your association’s members? If so, how did you handle it? And how did members react? Please share in the comments.