The ESU Foundation, which is undergoing a scandal, is an organization separate from ESU that does non-profit fundraising for the school. Those who work for the ESU
Foundation spend their time doing projects to improve the campus and raising money for student scholarships. Although the foundation is not a part of the university, it is inexorably associated with it. I'd rather not reverberate what's commonly known around campus, but I'll give a quick summary of what's going on. The former executive director of the ESU Foundation, Isaac Sanders, is being investigated for accusations of sexual harassment and misappropriation of funding. In addition, another former ESU Foundation employee, Vincent Dent, who worked under Sanders, used a company credit card to buy personal items. Sanders and Dent are now gone, which of course puts the organization in a much better light. However, an audit was recently conducted on the organization, and although it showed no illegal happenings, it showed lack in oversight. According to the Pocono Record, the audit showed that financial misstatements could have in fact occurred. If one couples the result of the audit with the ongoing investigation-and one might as well add most people's proclivity to doubt-the Foundation's statement that "[t]he money is safe" looks, regrettably, anything but reassuring. Moreover, a previously promised forensic audit that would have looked for fraud was, for whatever reason, reneged. All in all, it is hard for many formerly staunch supporters to now trust the organization.
The first question someone asks when considering donating to a charitable cause: Where's my money going? And then: Do I know exactly where it's going? Do I know the percent of it that will actually be used? Do I know if there's a risk it'll be misused? When just one of those questions yields a cloudy answer, the average person would, understandably, opt not to give to that organization. Right now, amid all of the bad publicity, the ESU Foundation finds much of its support hanging by a thread. On the ESU Foundation web page, under "Ethical Standards of the ESU Foundation," it reads, "It does not grant or accept favors for the personal gain of any individual, nor does it solicit or accept favors where a higher public interest would be violated." After reading this statement and immediately associating it with the foundation's scandal, those who have witnessed and appreciated the organization's dedication to ESU suddenly find a lump in their throats. There are few worse things that could have happened to the university. When a charitable organization's reputation is put into question, everything suddenly seems hopeless.
"All the students, faculty and employees at ESU need to know our university is a safe place to study and work," stresses Dr. Nancy VanArsdale, APSCUF President at ESU. "Our alumni and donors need to have trust in ESU. Last fall, faculty asked the University President if he could explain what had happened, and he informed us that he could not comment because of the ongoing investigation. There still is a dark cloud hanging over our campus." The ESU Foundation has, in fact, done sundry good things for the school it claims to be dedicated to helping to improve. "The foundation is committed to helping ESU and especially its students," John J. Ross, Acting Executive Director of the ESU Foundation, told me. "Last year we gave money for the construction of the Hoeffner Science and Technology Center, awarded grants for faculty projects, and provided over $300,000 in scholarships to 262 students." The facts that Mr. Ross provided are undeniable and commendable, and, because of this dedication to ESU and its students, the organization has had over the years and continues to have numerous donors and supporters.
I do think that the vast majority of those in the ESU Foundation have ESU's students as the number one priority. Nevertheless, with the ongoing scandal, all of the good that the organization has done could become an afterthought if its reputation is further hurt. As it took long enough to oust Sanders, those who know the importance of the organization's relationship with ESU would hope to see the ESU Foundation strain to show donors that it's trying to improve its weaknesses, rather than wait for the investigation to expose those weaknesses while the foundation stays inert as a lame duck.
As presumably most people thought after reading the findings of the audit, and as a Pocono Record Editorial expressed on January 25, if the Foundation wants trust to be restored, or at the very least wants to prevent it from plummeting further, it should go forth with the previously promised forensic audit. Of course, the thought that comes before that one is, "Why was the forensic audit reneged in the first place?" I had the following questions sent to the ESU Foundation's legal counsel:
"According to the Pocono Record's January 18 issue, a more expensive forensic audit would have been better able to show if any acts of wrongdoing were committed. Is this true? Why wasn't a forensic audit done?" Those questions were not answered. I didn't expect them to be answered, but it's disheartening that by now somebody else hasn't had such questions answered publicly, in depth.
Whether the foundation's silence is due to reluctance to expose wrongdoing or simply a by-product of the legal process, the apparent hesitance to quickly, efficiently ensure that the "ESU Foundation's money is safe" could very well be hurting donors' trust and the students who would benefit from the organization even worse than if the public knew that much misappropriation had in fact occurred. At least then the foundation could show its supporters the lengths it would go to in order to fix and thereafter prevent any corruption. And when someone has built a past of acting beneficently, he or she is never hard to forgive, so long as the effort to reconcile seems genuine. As the Pocono Record reported, forensic audits cost a considerable amount of money. Ideally there would be no need for audits. However, as it is only human to be tempted to pocket an unnoticeable amount of a large sum of money, detailed auditing is worth its cost. Additionally, judging by the situation the ESU Foundation is in, one would think it has no other choice, as right now it seems like spending a significant sum of money on a forensic audit would be money well-spent. But, even if a forensic audit is not performed, and regardless of the outcome of the investigation, because of what the audit revealed, the organization needs to do something, anything to show that procedures are being changed and that people's donations are safe from corruption. In late 2005, early 2006, the Red Cross endured a scandal in which money to help Hurricane Katrina victims was misappropriated. After the scandal, the Red Cross immediately changed procedures and security to make sure that such fraud would never happen again. Of course, as to the Red Cross scandal, not only is it a much larger organization than the ESU Foundation, but lives were literally at stake. However, the Hurricane Katrina scandal provides a good example of a charitable organization acting as quickly as it could to prevent future fraud. Furthermore, guilty-by-association is another all-too-human judgment. This organization has indeed done some great things that should not be overlooked, and has its staff (and donors, of course) to thank. But, when there have been one or two purported bad apples, supporters naturally grow wary. Though I wouldn't advise one to withhold donations to the ESU Foundation. A potential misappropriated thousand here and a thousand there can be seen as pennies to an organization with so much money, but to a person without much money who donated a few hundred dollars, the potential that his or her money was misused is terribly disheartening.
"This threshold is established so that auditors do not need to track down every dime…misstatements or inconsistencies must rise above in order to be considered noteworthy," Dan Berrett explained about auditing's materiality threshold in the Pocono Record's Jan 18 issue. "For the ESU Foundation, with its $17 million in assets, materiality could mean that inconsistencies of up to $72,000 would be tolerable, according to formulas used in generally accepted auditing standards." Although I don't know if that statement is entirely true, let's take it as such. $72,000 of $17 million is less than 1 percent, so that's only pennies to a large organization. Even $1,000 dollars is substantial. Young adults in college, as well as any other person off the street, would sacrifice a lot for that type of money, which, according to the allegations, has occurred already. Once committed to charitable causes, such an organization should not settle for auditing standards; nor, while enduring this scandal, should it rely on the ouster of one or two corrupt employees and its résumé of admirable accomplishments as proof of its attempt to mollify the misgivings of those it affects-everything must be accounted for so as to be able to serve to the fullest those that the organization claims to support. Nonetheless, unfortunately, it seems like the quiet waiting period will be protracted, with the "dark cloud hanging over our campus" staying awhile.
All of those affected, which pretty much means all of those with ties to the university, better hope that this investigation is not long and drawn out, or its negative effects on the ESU Foundation, and thereby our campus, could be tremendous.
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