The following four cases represent real stories where either upper management and / or members of the organization violated the trust of the organization. While it is often simple to identify problems and make recommendations to prevent them after they have occurred, identify what steps could or should have been taken to either prevent or reduce the abuses within each charity. Treat each case separately.

1A. Father Bruce Ritter The late Father Bruce Ritter founded Covenant House (CH) in 1972 to create a safe shelter for homeless teenagers. The organization had its humble beginnings in Ritter's shabby New York apartment where he first began providing housing for homeless youth. CH quickly grew into one of the most well-regarded charities in the nation. Ritter was called an "unsung hero" by President Reagan and was applauded by the first President Bush and Mother Teresa, alike.

But underneath all of this public acclaim, rumors had circulated for years of sexual relations between Ritter and residents of CH, according to a report commissioned by the charity. Four men stepped forward between 1989 and 1990, according to Time magazine, accusing Ritter of having sexual relationships with them while they were under his care. Ritter allegedly diverted up to $25,000 in CH money to finance one of these affairs, according to Time.

Although Ritter denied these allegations, he stepped down amidst the scandal. CH then launched its own investigation into the priest. The resulting report cited 15 cases of reported sexual contacts between Ritter and people sheltered or working at CH. The report concluded that evidence "that Father Ritter engaged in sexual activities with certain residents and made sexual advances towards certain members of the Faith Community is extensive."

The investigators also found what they described as minor financial irregularities at CH. According to the report, Ritter diverted CH funds to the Franciscan Charitable Trust, an organization he founded, and loaned charity money to two senior staff members who later resigned. The report also noted that CH had been structured so that Ritter had complete legal and operational control over its affairs, giving the board little authority or oversight powers.

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2B. William Aramony William Aramony served for 22 years as president and CEO of United Way of America (UWA), the umbrella group for thousands of local United Way organizations that fund social and human service projects nationwide. In 1992, Aramony resigned amidst allegations that he siphoned money from UWA through spin-off companies he helped to create. Before the scandal broke, Aramony was widely respected as one of the most influential nonprofit leaders of his time. He even had a hand in creating many of the rules under which charities operate today.

In 1995, Aramony and two conspirators, Thomas Merlo and Stephen Paulachak, were convicted of defrauding UWA. Aramony was convicted on 25 felony counts and sentenced to seven years in prison for fraudulently diverting $1.2 million of the charity's money to benefit himself and his friends. This scandal is especially memorable given how Aramony chose to use some of the charity's funds. For instance, he used UWA cash to woo a girl, Lori Villasor, who was only 17 years old when they began dating; Aramony was 59. He met Villasor while dating her slightly older sister. Both young women were added to UWA's payroll.

For his notoriously young girlfriend, Aramony spent $450,000 of the charity's money to purchase and lavishly furnish a New York condo; $78,000 to chauffeur her around New York City; and $4,800 to renovate her home in Florida. The couple vacationed in Egypt, London, Las Vegas, and Atlantic City. The New York Times reported on the testimony of Aramony's former aide, Rina Duncan, with whom he also had an affair. Duncan testified to falsifying Aramony's expense records for seven years so that he could charge the charity for things like champagne, flowers and plane tickets for Villasor. Aramony was also known for treating female employees inappropriately. He offered some women financial benefits if they had sex with him and would transfer those who declined, according to the indictment.

Aramony's lawyer claimed there were medical reasons for his client's behavior, arguing Aramony's ability to control impulses was impaired by brain atrophy. When Aramony resigned amidst scandal in 1992, the organization's growth in contributions stalled for a few years. CharityWatch president, Daniel Borochoff, remarked in USA Today in 1995 as to how the scandal influenced public perception of charities, saying, "It created a climate where donors are more questioning. They want to know more about how an organization is governed and the ethics of its leaders."

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