Nov. 11, 2011 -- Non-profit organizations are hardly immune to improprieties, but charities associated with scandal through its founder are in a deeper predicament, as is the case with The Second Mile, experts say.
The children's charity for troubled youth, founded by Jerry Sandusky, the former Penn State defensive coordinator arrested for alleged sexual abuse against eight boys, is relatively small as charities go, says Stacy Palmer, editor of the Chronicle of Philanthropy.
Sandusky, who retired from The Second Mile in September 2010, was the charity's primary fundraiser, according to the grand jury's report, which causes a problem for The Second Mile as it not only deals with an investigation by Pennsylvania Gov. Tom Corbett, but also the possible exodus of its donors.
"You pin a lot to that person, and when they fall especially with a small organization, it can be really damaging," Palmer said.
With revenue of $2.9 million in 2010, according to its annual report, and a staff of about 20, The Second Mile had three offices in Pennsylvania.
Sandusky helped establish the charity in 1977 with proceeds from his book, Developing Linebackers the Penn State Way, according to Sports Illustrated. The organization began as a foster group home and expanded into programs for troubled youth.
The Second Mile didn't return a request for comment.
Second Mile CEO Jack Raykovitz is an alum, as are many of its donors. But Palmer said the organization will have to separate itself from its associations with Penn State though that may be difficult given its ties to the university.
The organization must also assure donors that it is doing everything possible to make sure its children are protected in the future.
The fact that the allegations involve children the organization intended to serve makes the accusations especially troubling.
In a statement last weekthe organization said, "the newly released details and the breadth of the allegations from the Attorney General's office bring shock, sadness and concern from The Second Mile organization. Our prayers, care and compassion go out to all impacted."
"To our knowledge, all the alleged incidents occurred outside of our programs and events," the organization said on its website.
Raykovitz testified to the grand jury that he was informed in 2002 by Pennsylvania State University Athletic Director Tim Curley that an individual had reported to Curley that he was uncomfortable about seeing Jerry Sandusky in the locker room shower with a youth.
"Curley also shared that the information had been internally reviewed and that there was no finding of wrongdoing. At no time was The Second Mile made aware of the very serious allegations contained in the Grand Jury report," the charity said.
Sandusky adopted six children with his wife, three as infants and the other three children through foster care.
Sandusky was a highly-respected figure in the community, which makes the allegations against him, and implications that The Second Mile may have known about at least one reported incident of abuse by Sandusky, especially difficult for the charity.
Charities and Scandal
The Boy Scouts of America has dealt with accusations against adults associated with various chapters over the years. This week, a man in Spokane, Wash., filed a suit against the national organization for alleged sexual abuse by a scoutmaster in the late 1970s. In September, four men from Oregon sued the organization for $20 million as a scoutmaster who was an accused molester.
Over 35 individuals have reported complaints against the Boy Scouts of America for child sexual abuse since 2007 in almost a dozen states, according to the plaintiffs' attorney in Oregon, reported Reuters.
"Certainly lots of legitimate charities face serious reputational issues," Palmer said. "The Scouts are a strong organization but they had some questionable things."
The Boy Scouts of America had $770 million in net assets at the end of 2010, compared with $680 million at the end of 2009. It had $311 million in total revenue in 2010 compared to $287 million in 2009.
In April, Greg Mortenson, author of the book, Three Cups of Tea, and builder of schools in remote regions in Pakistan and Afghanistan, was accused of fabricating parts of his best-seller. In a "60 Minutes" broadcast, his non-profit, Central Asia Institute, was accused of spending excessive amounts on advertising his book and his travel expenses and book tours compared to similar charitable organizations.
Mortenson has defended his story and his colleagues have defended him.
There is an ongoing lawsuit filed by readers who bought Mortenson's book in Montana. The institute continues to operate.
Second Mile's funds are much more limited than that of large national organizations like the Boy Scouts.
According to its 2010 annual report, the largest category of The Second Mile's revenues, 27 percent, came from events: $725,525 after expenses. Corporations gave $633,880, individuals gave $438,308 and foundations provided $361,783.
"Anyone who has made a significant gift would be concerned where there money went," Palmer said, and "corporations would be concerned about their Tmage."
Penn State athletics' corporate sponsors are also watching how events unfold at the university. Cars.com has announced it is canceling its sponsorship of Penn State football broadcasts for the next two Saturdays and redistributed its ads during those games.
"Due to the recent allegations surrounding the Penn State Football program, Cars.com notified ESPN on Tuesday morning of its plans to withdraw from this weekend's sponsorship of the Nebraska at Penn State game, as well as next weekend's game between Penn State and Ohio State," the company said in a statement. "As a proud, longtime supporter of ESPN College Football, it's important to us that we're building our brand in a way that celebrates the sport, its fans and the dedication of its student athletes."