Lately, it seems impossible to scroll through the news without seeing another headline about nonprofit fraud or financial mismanagement.
Across North Dakota and nationwide, nonprofits have been dominating headlines at an alarming rate with allegations of fraud, embezzlement, and financial mismanagement. Every time a new investigation breaks, public skepticism creeps in, casting an unfair shadow across the thousands of organizations across our state doing it right day in and day out with total integrity.
That reality is exactly why NDANO launched The Control Room, a monthly, confidential drop-in space for nonprofit leaders and board members.
Last month, we kicked off our very first session, gathering board members, executive directors, and nonprofit leaders virtually for an hour to pull back the curtain on the things people usually only whisper about in the hallway after a meeting.
Given the great questions and follow-ups that came out of our kickoff, here are three of the biggest takeaways from the discussion, along with an open invitation to pull up a virtual chair for our next session, THIS Thursday, November 5 at 1pm CT.
1. Internal Controls are a Shield, Not an Interrogation
The single biggest roadblock to good financial governance is the fear of being perceived as accusatory.
Volunteer board members often hold back from asking to see a bank statement or an itemized invoice because they worry, "I don’t want leadership to think I don’t trust them." Meanwhile, executive directors can feel like routine board questions are a personal vote of no confidence.
We need to flip that narrative completely. Good internal controls are not instituted out of suspicion; they are a defensive shield.
They protect the staff from unfounded rumors, community gossip, or being left holding the bag if numbers do not reconcile.
They protect volunteer board members from personal legal liability, because while a board can delegate daily operations, under the law they cannot delegate fiduciary accountability.
They also protect the mission and donor intent, ensuring the organization remains sustainable for the long haul.
When controls are framed as mutual protection, accountability stops feeling like a confrontation and starts feeling like good teamwork.
2. The Danger of the Single Point of Failure
Once you view controls as protection rather than suspicion, the first critical vulnerability to tackle is the single point of failure. Most fiscal breakdowns do not stem from complex schemes; they happen through routine convenience.
When one person enters the bills, writes the checks, swipes the credit card, and balances the bank reconciliation alone, both the individual and the organization are put at immense risk. If that one person burns out, gets sick, or makes an honest mathematical error, nobody else knows where the passwords are or how the bills get paid.
The solution does not require a mountain of red tape; it just takes a basic division of responsibilities:
- View-Only Bank and Accounting Software Access for the Treasurer: The board should not rely solely on internally generated spreadsheets or exported PDFs. Providing the Board Treasurer with view-only login access to the online banking portal and accounting software allows for independent verification. This simple step protects executive leadership just as much as the board by ensuring no single person carries unverified financial custody alone.
- Dual Authorization: Require two authorized signatures or digital approvals for checks and disbursements above a reasonable threshold.
- Supervisory Sign-Offs: The board, typically the Treasurer or Chair, should review and sign off on the Executive Director’s monthly credit card statements and reimbursements. In turn, executive leadership reviews all staff spending.
3. Red Flags Every Board Member Should Know
Establishing healthy checks and balances also means knowing what warning signs look like when standard processes start slipping. During our last session, we talked through the common friction points that pop up in board packets across our state. If you spot these patterns, it doesn’t automatically mean someone is doing something wrong, but it does mean your guardrails need tightening:
- The Last-Minute Financial Packet: Receiving financial reports 15 minutes before the meeting or handed out at the meeting is not enough time for a proper review. A board needs at least 3 to 5 days to review reports prior to the meeting.
- The "Income Statement Only" Trap: A single summary Profit and Loss sheet is not a complete financial packet. Boards must see a full Balance Sheet to track cash reserves and liabilities, along with a Budget-to-Actual variance report to catch overspending early.
- Vague Receipts and Card Logs: Lump-sum charges without itemized receipts, or credit card logs submitted months late leave the door wide open for card misuse and put both the employee and the organization in a vulnerable spot.
Talking through these exact friction points in a safe, constructive environment is why this initiative came to life, aligning directly with NDANO’s twofold purpose on the topic: to actively champion the thousands of nonprofits across North Dakota doing it right day in and day out with hard work, integrity, and good stewardship, while directly empowering boards and leadership teams with the tools to spot red flags early and take decisive action long before an operational breakdown ever hits the news.
The Control Room meets virtually once a month with some simple ground rules to keep the space comfortable and candid:
- Nothing is recorded to ensure total candor and confidentiality.
- Questions can be framed hypothetically, such as "Suppose an organization has..." or “What if an organization did…”
- Everything shared is peer guidance designed to unpack common nonprofit governance challenges, red flags, and practical financial controls. Nothing shared in this space constitutes formal legal or accounting advice; for those, always consult a qualified attorney or Certified Public Accountant (CPA).
Whether you are an executive director looking for sample policies or a board member who just wants to understand how to read a balance sheet without feeling silly, this room is built for you.
How to Join the Next Session:
Log into your NDANO Member Portal at ndano.org to find dates and grab the meeting link; we meet on the first Thursday of every month at 1:00 PM Central Time unless otherwise noted, so grab a cup of coffee, bring your questions, and let’s build stronger organizations together.
Hope to see you in the room!
Cheers,
Megan Indvik, NDANO Board Member
