Grass-roots nonprofits now find themselves under intense scrutiny following the scandal over the fabrications in Greg Mortenson's bestselling book "Three Cups of Tea," and the allegations that Mortenson's charity, Central Asia Institute, mishandled millions in donations.
The scandal is the talk of the non-profit community, reports the Wall Street Journal, and is likely to result in extensive auditing and increased expectations. The nonprofit community is already feeling the push. Former Marine Capt. Rye Barcott, who heads a grass-roots nonprofit to help slum dwellers in Kenya, and, like Mortensen, has written a memoir to promote it, relates the suspicion and decreased funding he has encountered on his current 26-city book tour. At one of his recent fundraisers in Atlanta, Barcott said that few in the wealthy crowd gave more than $1,000, and a man told Barcott that he had read and promoted Mortenson's book and that now he felt ashamed. National charities fear similar treatment; Medill School of Journalism reports that local Chicago charities fear a backlash of scrutiny because of the Mortenson allegations.
However, many might find increased suspicion to be a necessary step to correcting flaws in the nonprofit system. Charity Navigator, one of the largest charity-watch sites, previously gave Mortenson's institute four stars -- its highest rating -- in a move reminiscent of credit ratings agencies' assessments before the financial crisis. Now Charity Navigator has a large "donor warning" label in red for the group, and is "in the midst of revamping our rating system," said president Ken Berger. The new approach, set to begin in July, will look not just at financial information but at performance in relation to objectives. Applying the new test to Mortenson's Central Asia Institute, Berger found that instead of four stars, it received zero.