Travel voucher horror story hits Points of Light Foundation

The NonProfit Times broke a story this week about an unfolding scandal at the Points of Light Institute.

"An estimated 1,100 customers who purchased travel vouchers for airline flights from the Points of Light Institute’s store on eBay have been left with nothing. The Points of Light Institute has closed that area of the eBay store and is working with law enforcement to investigate what it is calling “significant financial and operational irregularities.”

Each reservation is for one to four people, so as many as 4,400 travelers could be impacted. Sources told The NonProfit Times that travel had been booked through May 2009 that could total more than $1 million."

Michelle Nunn, president and CEO, was interview by The NonProfit Times on Tuesday and tried to explain how the organization uncovered the scandal.

"Two senior managers learned of the irregularities through customer complaints, which they explored and ultimately verified through an independent contractor, and reported to Nunn on the evening of June 26, she said. Customers were notified of the situation late Friday, July 4, at which time the refund application process began.

Because of the ongoing investigation, Nunn could not elaborate on the type of “irregularities.” She said the U.S. Attorney’s Office in Washington, D.C., was contacted within 24 hours, as was the organization’s counsel -- McKenna, Long & Aldridge -- which is doing its own investigation."

It's amazing what kinds of problems managers can actually uncover when they explore customer complaints. Sounds like whoever was pulling off the scam set-up a complex way of hiding what they were doing. Apparently, the organization is still trying to figure out exactly what happened.

"The independent contractor was terminated “as soon as we learned of these issues,” Nunn said. The contract was created and begun in 2003 as a program of the Points of Light Foundation, which merged with the Hands On Network last year. The independent contractor, Maria Herrmann, was a former employee in business development at the Points of Light Foundation, but Nunn did not know the duration of her employ prior to that.

Herrmann is no longer listed on the organization’s Web site and calls to her cell phone and home phone were not returned. A woman answering the door at Herrmann’s Washington, D.C. residence told a reporter she could not help her and declined to say if she was in fact Maria Herrmann."

Call me a cynic, but the whole idea of people raising money for charities by selling discounted travel vouchers sounds shady. Call me a purist, but I get really queasy when the donor's motivation is driven by the idea of "getting something for free" instead of for the donor intent being on helping support the mission.

In hindsight, I wonder if the Board of Directors sees this observation by The NonProfit Times as a damning indictment of the senior management and their own culpability is allowing this to happen:

Despite thousands of tickets being sold, Nunn described the eStore as a “very small enterprise,” grossing about $100,000 and netting $15,000 in the fiscal year ending 2007. She explained that the numbers "are the totals that were reported on our books and in our audited statements of Points of Light Foundation (pre-merger). The recent discoveries obviously do not align to these numbers and that is what is under investigation.”

The NPT story can be from here and to read about a traveler's horror story, go here.

UPDATE: Some people at the eBay Forums website think that incentive travel company Mitch-Stuart, Inc. is to blame. I wonder if there is going to be a blame game coming next? Hermann was quoted in the NPT in May of 2007 talking about Mitch-Stuart.