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What in Hell Happened to Hull House?

I’ve been “talking” with my Northeastern University Fundraising class (online) these past few days about the collapse of Hull House in Chicago.  After we get past  the shock of how such a venerable institution, committed to the widely varied immigrant populations of Greater Chicago, could collapse after 123 years, we do some research and we ask some questions.

Board members blame the staff for “sugar-coating” a nasty financial situation.  Please. Financial reports as far back as 2007 showed a $2.3 million loss.  Were board members sophisticated enough to distinguish the difference between an operating deficit and a declining valuation of assets?  Given the story in the Chronicle of Philanthropy blog of a few days ago, the numbers were right there, with or without sugar.

Did board members hear directly from the auditor who reviewed the financial statements?  A lesson for all nonprofit boards: The firm that conducts the audit should present both to the Audit Committee (or Finance Committee) and to the full Board of Directors.  The lead CPA on the job, always a person with nonprofit accounting experience, should present the audited statements and be available to answer questions.  And for board members who join the organization without financial experience, there should be an orientation with the Treasurer, Finance Committee chair, and the staff person who prepares the monthly statements present to present the documents and answer those questions.

January 27, 2012 must have been a very dark day for the 300 (now) former employees of Hull House when they learned that the doors would be closing.

Not to mention the people who were receiving services.  And you can see the array of services they provided at  The website still stands.  And the Hull House Museum is in operation.

So the collapse spiraled out of control over at least a five year period, if not more.

I post this sad tale to get the attention of board members and senior staff of nonprofits great and small.  Board members have a legal and fiduciary duty to take care of the nonprofit organization.  Take care of its mission, the people it serves, the people it employs, and the assets of the nonprofit.  It’s a big job.  The job has to be taken seriously and with both eyes wide open.  The numbers on the financial reports have to make sense.  No amount of sugar can compensate for a troublesome financial situation.

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