In September, 2009, Proskauer, by way of Scott Harshbarger, was retained by the Association of Community Organizations for Reform Now (“ACORN”) to conduct an independent analysis of the videos that caused this summer’s uproar as well as the organization as a whole, including its core weaknesses and inherent strengths. Our report on ACORN, which was publicly issued on December 7, 2009, can be found here.

The hidden camera controversy has been perceived by many as a third strike against ACORN on the heels of the disclosure in June, 2008 of an embezzlement cover-up, which triggered the firing of ACORN’s founder, and the allegations of voter registration fraud during the 2008 election, done in collaboration with a separate entity, Project Vote.  It erupted just as ACORN’s reform leadership was about to complete an ambitious and professionally directed organizational and cultural transformation designed to revisit its mission, reshape its scope and charter, and squarely meet its legal, governance, and compliance responsibilities.

The serious management challenges detailed in our report are the fault of ACORN’s founder and a cadre of leaders who, in their drive for growth, failed to commit the organization to the basic, appropriate standards of governance and accountability.  As a result, ACORN not only fell short of living its principles but also left itself vulnerable to public embarrassment.

See how your organization can learn from ACORN’s past failures.

From our review of ACORN, we did not find a pattern of intentional, illegal conduct by ACORN staff.  Instead, what we found was that the hidden videos represent the byproduct of ACORN’s longstanding management weaknesses, including a lack of training, a lack of procedures, and a lack of on-site supervision.

ACORN’s current leadership understands full well what must be done.  If nothing else, the organization’s recent crisis and turmoil has educated its leadership and staff about the importance of prevention.  With our recommendations in hand, ACORN now has a roadmap for reform.  Our experience tells us that these recommendations, acted on with a sense of urgency, are crucial to reclaim, maintain, and strengthen ACORN’s ability to serve its members and constituents.

The following nine recommendations are neither an epitaph nor an absolution for ACORN, but are a roadmap to reform and renewal, if implemented in their entirety in concert with other measures to regain the public’s trust.  Where relevant, these recommendations may also be helpful to other charities to ensure that their activities comport with some suggested best practices.

1.  ACORN should return its organizational focus to its core competency – community organizing and citizen engagement empowerment, with related services – and transition away from the provision of services that may be provided more effectively and efficiently by others.

2.  ACORN should consolidate, simplify and centralize its local and national organizational staffing, monitoring and supervision.

3.  ACORN should develop a simplified national organization and board structure consisting of just two entities – a 501(c)(3) for charitable, non-profit fundraising, advocacy and education with a majority of independent members, and a 501(c)(4) for support of ACORN community organization and political activity, with at least one-third independent members.

4.  ACORN should continue to implement the comprehensive internal governance program and strategy, including internal controls, compliance, and codes of ethics, designed to educate and guide staff, volunteers, and board members, that was recommended and has been adopted within the past year.

5.  ACORN should recruit an independent ethics officer, an independent inspector general, or both, to oversee and implement the governance and compliance program at the national level, and an independent member of the national board should chair a board-level ethics and governance committee.

6.  ACORN should hire an appropriately qualified and experienced chief operating and financial officer, comptroller, and in-house auditing staff.

7.  ACORN should continue to strengthen its legal capacity to guide its governance reforms, coordinate the dissolution of all extraneous ACORN organizations and represent the organization’s interests in litigation and investigations.

8.  ACORN should require all of its state and local affiliates to agree to oversight by the national staff and board, and to adhere to appropriate national standards, including financial audits, training and supervision.

9.  ACORN should formalize a strong, independent national advisory group and charge it with the responsibility to report within six months, and thereafter annually for two years, to the national board on the progress of the reform action plan.

ACORN’s transformation may succeed if its current leaders move rapidly to implement effective legal best practices and appropriate regulatory compliance and governance systems. ACORN will then be in a position to regain and reinforce the trust and credibility required to successfully pursue a mission on which hundreds of thousands of citizens depend.  The roadmap for reform is clear, but it will not occur overnight and will require perseverance and patience.