Towers Perrin

Over the past few years, Washington, D.C., has witnessed two explosive nonprofit scandals. In 2005, the board of American University received a letter from an anonymous whistle-blower alleging that the university’s president, Ben Ladner, was abusing his university expense account. A subsequent audit found that Ladner had indeed spent more than $500,000 of university funds on lavish personal expenses, including a $5,000 vacation in London and a $15,000 engagement party for his son. Already concerned about Ladner’s compensation—which was higher than those of all Ivy League college presidents—the board split over whether to reduce Ladner’s pay. The fracas filled newspaper gossip columns for months, sparked a congressional inquiry, and eventually led to Ladner’s termination. The board then required two years to rebuild itself and to name a new president.