CASE 11.3
Giving And Spending The United Way
The united way, wich envolved from the local community chests of the 1920s, is a national organization that funnels funding to charities through a payroll deduction system. Ninety percent of all charitable payroll deductionsin 1991 were for the united way. This system, however has been criticized as coercive. Bonuses, president of united way commented,”if participation is 100 percent, it means someone has been coerced.”
When Aramony’s expenses and salry became public, Aramony resigned after fifteen chapters of the United Way threatened to withhold their annual dues to the national office. In August 1992, the United Way board of directors hired Elaine Chao, the peace Corps Director, to replace William Aramony at a salary of $195.000, with no perks. She reduce staff from 275 to 185 and borrowed $1,5 million to compensate for a decline in donations. Ms. Chao has since left the United Way and has served as secretary of labor for the Bush administration since 2001.
In September 1994, William Aramony and two other United Way officers, including the chief financial officer, were indected by a federal grand jury for conspiracy, mail fraud, and tax fraud. On april 3, 1995, Aramony was found guilty of twenty five count of fraud, conspiracy, and money laundering. Two other United Way executives were also convicted. Mr.Aramony was sentenced to eighty-four months in prison(and fined $300.000) and was released in 2004. In this chapter told nonprofit and management, the conduct of Mr. William aramony is unethical he take the benefit for him self but that could be damage for the company.
Often with nonprofits, the problem is not fraud by the organization it’s fraud by misconduct or missteps with the organization. Whether because of inexperience, the need for flexibility in management, or just as with companies the drive for success and result, there have been some ethical issues that have proven costly for the nonprofit organization.