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Developing Customer Relations

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Developing Public Relations
Lisa Anne Nagel
Professor Largaespada
BUS300
January 29, 2012

PipeVine Inc. Is a non-profit organization that has been helping other non-profits such as United Way, and agencies such as Chevron, Cisco, AOL, and Yahoo, they were to collect donations in sponsored donation events. Pipe Vine was created in 1993 as a subsidiary of United Way to complete backend paper work and maintain an even flow of collections as well as payouts. Originally called United Nonprofit Operations the name changed when it was spun off to be PipeVine as a separate nonprofit organization with its own independent board members and no longer is affiliated to United Way. PipeVine was created to handle large amounts of money and maintain the incoming payments made by the public and then allocate them to the proper organizations. The Mission of this company is stated as:” to assist the caring power of communities around the world to advance the common good”. In the recent events the PipeVine Inc.’s reputation has been tarnished and now finds itself in defense of recent accusations. PipeVine Inc. was housed in San Francisco, handling more than $100 million a year. Today PipeVine finds them having to explain the loss of funds pay to them. According to the Journal “PipeVine Inc., which handled charitable contributions for United Way campaigns in the Bay Area and around the country, deliberately diverted at least $2 million in donations to keep itself afloat over the past three years, The Chronicle has learned. The San Francisco nonprofit company -- which processed more than $100 million in donations a year before it abruptly shut down June 2 -- acknowledged that one or more employees appear to have purposely siphoned charitable donations into company coffers. PipeVine previously admitted it misspent some donations on its own salaries and operations, but it originally blamed the entire problem on faulty accounting. Some of the charities affected by the diversion, such as the Sept. 11 Fund, were belatedly paid after in-house accountants discovered the diversion in early February. Other charities, such as the United Way of the Bay Area and the Make a Wish Foundation in San Francisco, are still waiting for their money. PipeVine spokesman Jeff Raleigh said the company does not know how much money that was earmarked for charities was never distributed. In a letter sent to customers Tuesday, the company said it has at least $3 million in frozen bank accounts that it hopes to distribute to charities "as soon as possible."
But even using the frozen funds, Raleigh said, PipeVine doesn't have the money to pay charities at least $4 million they are owed. That's because in addition to the $2 million in purposely diverted funds, PipeVine appears to have misspent millions more in donations due to improper accounting. The Chronicle learned about the diversion by interviewing former PipeVine employees and reviewing some of the company's internal documents, including a list of checks that were improperly voided. Raleigh confirmed most of the details in an interview this week.
The unraveling of PipeVine could have national repercussions because it handled donations not only for several United Ways, including United Way of the Bay Area, but also major corporations, including Clorox, Bank of America, McKesson and ChevronTexaco. Some nonprofits fear the news could hurt donors' confidence in the United Way and possibly the nonprofit sector as a whole. PipeVine received employee donations directly from companies, deposited the money into its own bank account, deducted a commission (usually around 7 percent) and issued new checks to nonprofits the donors designated.
Investigators discovered that since July 1, 2000, roughly $2 million in large checks to charities, each for more than $10,000, were never cashed and likely never delivered. Instead, PipeVine voided the checks it wrote to charities and held onto the money -- treating it like newfound cash, which it could use to pay everything from company salaries to telephone bills.
To disguise the source of the revenue, PipeVine gave outside auditor’s income sheets with phony entries. One document listed a $360,000 payment in contract fees from SBC Communications even though SBC was not a customer at the time, Raleigh said. (Excerpt take from SF Journal, Todd Wallack, retrieved on January 29, 2012). In a public relations campaign to defend this accusation, news broadcast needs to immediately create and a brief explanation of the reason this has happened. By addressing the firms who were at a loss at this moment with a reason should be imperative. The best case scenario would be to say “PipeVine is the steward of other people’s money, and we take that seriously,” “PipeVine intends to honor all contributions and immediately will evaluate what has happened and restart the payment process. If there is anyone who feels that payments have been missed to their company please call 555-555-555.” Along with the news broadcast, a spokesperson for the company should send information to newspapers, TV stations, and radio stations announcing the sincerity of the PipeVine companies’ apology and will take immediate action to the claims and make the accountability right. The position PipeVine takes is how the public will either accept or refuse the apology as well as information to defend the allegations. PipeVine needs to immediately come forward with tits books and make sure everything they have documented is legal and up to date. The best thing the company can do right now is completely assist in the investigations by the authorities. One of the biggest pieces of information that needs to get out to the public is to not feel as if donations are not being handled properly and for the public to feel comfortable in continuing to make donations. Trust has to be kept in order to keep an outcry from the public. As far as the money shortages, the PipeVine Company has to be honest and indicate that there was no theft or embezzlement, so that inside workers don’t feel compelled to make up stories to defend themselves and make up lies. As the information is completed and the firm has processed all information to the investigation, a formal statement of the companies’ demise should be announced, with that public statement a completer run down of who was paid how much and how much was left for the business to cover and additional expense. PipeVine has to make sure they maintain low budgeted public relations because of the situation of being short on cash. A complete statement of reiteration of the company’s mission and values needs to be substantiated. A personal letter of apology should be sent to each and every firm that was a customer of PipeVine. Clearly specifying the objectives to clear the investigation and resolve all issues. One of the most important issues of this PR campaign is to keep it positive and low budgeted. PipeVine has created a viral situation that is poor business management in the public eyes, in order to repair this situation the firm needs to be as honest and clear as possible to the public and its customers.

Reference:

Nonprofit kept millions it collected for charity, Todd Wallack, Chronicle Staff Writer Thursday, June 26, 2003 Read more: http://www.sfgate.com/cgibin/article.cgi?f=/c/a/2003/06/26/MN204269.DTL&ao=all#ixzz1ktmnHk83
Seitel, F. P. (2011). The practice of public relations: 2010 custom edition (11th ed.). Upper Saddle River, NJ: Prentice Hall – Pearson.

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