This case focuses on the business ethics topic of corporate governance in a nonprofit organization with issues involving conflicts of interest, organizational politics, and lack of internal controls. Secondary issues focus on accounting problems associated with accounting controls of the organization. The case has a difficulty level appropriate for an undergraduate junior level Business Ethics or Accounting course. It is designed to be taught in one to two class periods with the requirement of three to six hours of outside preparation by students.
Unlike Dragnet, the detective show, more than the names of the innocent have been altered in this case based on facts, people, and events from a real nonprofit organization. The facts and events came to light when the organization's respective state auditors issued findings from a compliance audit. While nonprofit organizations may receive funds for promoting social welfare as in this case, the ethical and business issues are common to ethical dilemmas, business structure and related business issues for all business organization forms.
RURAL NEBRASKA CASE
Community Organizing Rural Nebraska (CORN) was established on October 25th, 1966. Upon its adoption of the set of bylaws and articles of association on January the 13th, 1967, it was designated as an association of the state of Nebraska under section 47 N.S., 1965 Supplement 1004 (L), of state law. On February 4, 1967, it was formally designated as the fourth Economic Development District in Washington, D.C.
The primary mission of CORN is to serve 23 of Nebraska's 93 counties' rural constituents' needs for services generally provided by city government in larger towns and cities. The association obtains, manages, or administers grants and funds for such services as fire or police protection, geriatric care, and waste management. General these grants and funds come from state or federal agencies and governments. The association charges a small percentage, four to six percent, of the funds administered to cover this non-profit entity's costs and to pay the salaries of the staff.
An executive director appointed by the Board of Directors leads CORN. A professional in enterprise, endeavor, or venture staffs each specialized subsidiary department of this non-profit corporation.
Community Assistance Rural Disposal, Inc. (CARD) is a nonprofit corporation formed September 12, 1993, for the purpose of managing the landfill purchased by CORN on November 1, 1992. The land fill was purchased from the city of Beatrice. The city cannot afford to offer such services outside the city limits yet the smaller municipalities of Crab Orchard, Adams, and Courtland need and use the services. CORN is one of the few organizations that can afford to provide these. The corporation has the same tax status as CORN. CARD also operates and maintains a trash hauling disposal service operating under the name of Country Disposal Services. CARD proves larger amounts of revenue as well as creates higher potential liabilities for the organization. EPA Standards require that CARD monitor and maintain the land fill for 30 years after its closure.
Mark "Guy" Jefferson, executive director. Guy came to CORN as its first executive director. A native of Orlando, FL, Guy brings 20 years of business experience to the organization. Those who know him, describe him as a visionary and a brilliant man from a brilliant family. An entrepreneur by nature, Jefferson made and lost at least two fortunes before directing CORN. He uses his entrepreneurial skills to lead the organization as though he owns it. During his tenure at CORN, the organization expanded into waste disposal services, purchased land for housing and other development, expanded food service and other services to rural communities, and plans to build affordable housing for the poor in rural areas. …