The requirements of anti-corruption laws such as the FCPA and U.K. Bribery Act apply to charities as well as for-profit entities. Yet, many charitable entities in the United States are not aware of such potential exposure and do not have anything close to a best practices compliance program. Two recent developments caught the eye of The Man From FCPA about charities and best practices.
The first report noted how charities often are required to “do more with less.” Ray Justice, senior director of compliance operations and awards at Plan International USA, said that “there can be trade-offs between investments and opportunities to improve processes and procedures. I believe you see smaller organizations having great compliance systems in place, but if they grow too fast they cannot keep up with it and struggle.” Another challenge is overlaying a charitable entity’s compliance requirements with those from both corporate donors as well as entities receiving the donated goods and services overseas.
The second story is about the English charity Oxfam, which is accused of engaging in a cover-up over allegations of sexual abuse in Haiti. The claims are that Oxfam staff consorted with prostitutes and may have engaged in sex with minors. There are also allegations that whistleblowers on these claims were terminated, threatened, and otherwise discriminated against after they came forward. Those involved in the Haiti incident were allowed to resign from the charity with no action taken against them. Their potential illegal conduct was not reported to the appropriate authorities. It is a sordid story all the way around.
Both of these stories point to the need for compliance to be embedded in every organization, both profit and non-profit. While there has yet to be a charitable entity criminally prosecuted under the FCPA, there have been civil FCPA enforcement actions involving charitable donations–most notably Eli Lily, Schering-Plough, and Nu Skin. The stories of Plan International USA and of Oxfam make clear the need for robust compliance programs in a non-profit charity.