When Trust Is Not Enough: A Hard Lesson for Nonprofit Boards
Last week, many of us in the nonprofit community read disturbing news out of Los Angeles. Prosecutors allege that the former CEO of The Painted Turtle, a well-known nonprofit founded by Paul Newman to serve children with serious medical conditions, embezzled more than $5 million over several years. The alleged scheme went undetected until after his departure, when a new controller uncovered irregularities in financial records dating back years.
This is not a story about one bad actor. It is a cautionary tale about governance, oversight, and what happens when boards unintentionally confuse trust with accountability.
As Executive Director of the National Association of Park Foundations and CEO of KORE Association Services, I spend a great deal of time working with nonprofit boards across the country. I can say with confidence that most board members are well-intentioned, mission-driven people who volunteer their time because they care deeply about the cause. That is precisely why this case deserves serious reflection. Good intentions do not replace fiduciary responsibility.
What went wrong
Based on what has been publicly reported, the alleged fraud was able to continue for years because too much financial authority rested with one individual. When a CEO also controls accounting functions, oversees financial systems, and has unchecked access to funds, the organization is exposed. That risk exists regardless of reputation, mission, or size.
Boards are not expected to run day-to-day operations. They are expected to ensure that proper systems, controls, and oversight are in place. When those systems are weak or overly reliant on one trusted executive, the board has fallen short of its duty of care.
What boards should be doing now
This case should prompt immediate action, not quiet reassurance that “it could never happen here.” It can. And it does.
Here are my recommendations for nonprofit boards, particularly those overseeing organizations with annual revenue exceeding $500,000.
1. Authorize a financial audit immediately
If your organization has not had a recent independent financial audit, the board should authorize one now. This is not an accusation. It is a prudent governance step.
For organizations above the $500,000 revenue threshold, an audit should not be optional. It should be standard practice. Audits do not catch all fraud, but they do force transparency, documentation, and independent review. Waiting until there is a problem is waiting too long.
2. Ensure true separation of duties
No single staff member, including the CEO, should be able to authorize transactions, process payments, and reconcile accounts.
If staffing is limited, the board must compensate through outside accounting support or increased board-level oversight. Limited resources do not excuse poor controls.
3. Strengthen the finance or audit committee
A functioning finance or audit committee should do more than review numbers. It should understand processes, ask questions, and meet directly with auditors without staff present at least once a year.
If your board does not have members who feel comfortable reading financial statements, that is a governance gap that must be addressed.
4. Normalize hard questions
Board members should feel both empowered and obligated to ask questions about financial trends, variances, and controls. Asking questions is not distrust. It is fiduciary responsibility.
A culture where questions are discouraged, deferred, or brushed aside is a risk environment.
5. Make whistleblower policies real
Every nonprofit claims to have a whistleblower policy. Far fewer ensure that staff know how to use it and feel safe doing so.
Boards should establish a direct reporting channel that bypasses senior management when necessary and make it clear that retaliation will not be tolerated.
6. Remember that oversight is active, not passive
Approving reports, accepting explanations, and trusting leadership without verification does not satisfy the duty of care. Board service is not ceremonial. It is governance.
A final thought
The most painful part of cases like this is not the financial loss. It is the erosion of trust, the harm to the mission, and the distraction from the communities nonprofits exist to serve.
Strong governance protects more than money. It protects credibility, staff, donors, and the people who rely on our work.
If this moment causes boards to pause, reassess, and strengthen their oversight practices, then some good can come from a very difficult situation. Trust will always matter in nonprofits. But trust, without accountability, is not leadership.
Kevin D. Korenthal, CAE, is the Executive Director of the National Association of Park Foundations and Chief Executive Officer of KORE Association Services, a trade and nonprofit consultancy. Nothing in this material should be construed as legal or accounting advice. Any nonprofit organization that believes it may be the victim of financial fraud should immediately engage qualified legal counsel, its independent auditor, and, where appropriate, law enforcement to assess the situation and determine appropriate next steps.













