Want to volunteer? Be sure your credit's good

Nonprofits' screening of volunteers may include credit checks

By Analisa Nazareno

Volunteerism is on the rise, thanks in part to the recession. And more and more, volunteers are being asked to submit to the same background screening techniques that employers use to vet job candidates. 

More parents are inside classrooms or on soccer fields, helping children. More Good Samaritans are in food banks, sorting and distributing food. More job-seekers are inside the offices of nonprofit organizations, hoping to network and maintain a fresh resume. Data from the Corporation for National & Community Service bears this out. So, to handle the onslaught of volunteers, some groups are using third-party screening companies that prepare "consumer reports," which sometimes include credit checks.

"Volunteers can do almost anything a paid worker can do," said Tena Friery, a research specialist with the Privacy Rights Clearinghouse, a San Diego, Calif.-based nonprofit consumer organization. "And like employers, some volunteer organizations are using credit checks as a character assessment."

Background checks spark controversy
Federal and some state laws passed in the wake of Sept. 11, 2001, require some nonprofit organizations to conduct criminal background checks on volunteers. While nonprofit leaders feel that the tougher standards offer valuable protection to the public, they say it places them in uncomfortable positions.

"It's disruptive. It's intrusive. And it puts the charity in a poor situation," said Howard Dvorkin, CEO of the nonprofit Consolidated Credit Counseling Services, which conducts credit checks and fingerprint background checks on its volunteer board members, as well as some volunteers who may have access to clients' financial information.

"These are volunteer positions and people are giving their time. And you're, all of a sudden, asking people to go to the police department and go get their fingerprints done and to give us their Social Security numbers so we can do a credit check."

Still, a credit check can reveal valuable information about a candidate, Dvorkin said.

"A credit report tells a lot more than if you pay your bills," Dvorkin said. "It says whether this person is fiscally irresponsible and possibly shows desperation. If a person is falling far behind on their bills, they may try to get those bills paid by any means possible."

Friery, with the Privacy Rights Clearinghouse, says organizations are legally required to ask permission before screening volunteer and employee applicants. Though few organizations check the credit histories of their volunteers, many will ask applicants to sign consent forms that allow the organization or a third-party screening company to perform consumer reports.

Not necessarily a credit check
A consumer report is legally defined as any type of report compiled by a consumer reporting agency. Those agencies could include the three large national credit reporting agencies -- Experian, TransUnion and Equifax -- as well as any of many smaller companies that collect data such as employment history, medical records or payments, tenant history, check-writing history and insurance claims. A consumer report doesn't necessarily include a person's credit history, but it could.

"They should tell you what the screening will include, if it will include the credit check or not," Friery said. "You certainly have the right to question that organization. You understand that they have to check certain things, but you are certainly entitled to a certain amount of respect to your privacy. And I would consider a credit report an unnecessary invasion of privacy."

According to a 2008 report by the National Center for Victims of Crime, 88 percent of 517 nonprofit organizations performed at least minimal screening of volunteers, such as calling references or verifying employment history. Of those, only 3 percent conducted credit checks on volunteers. The report recommended nonprofit leaders consider conducting credit checks regularly for volunteer positions that gave access to funds, donor information or to vulnerable clients.

"We encourage people to really think about what types of background information should disqualify someone from a given position," said Susan Howley, director of public policy for the NCVC. "We weren't saying that no one with bad credit should be allowed to volunteer, but you might not put someone with significant credit problems in your accounting department or give someone with financial crimes in their background, or a terrible credit history, access to the personal and financial information of your clients."

A growing trend
To address the increasing security concerns of groups like the NCVC and others, more nonprofit agencies are turning to third-party screening companies to vet candidates.

"Volunteer screening is definitely on the rise," said Jason B. Morris, a spokesman for the National Association of Professional Background Screeners, as well as president and COO for EmployeeScreenIQ, a Cleveland-based background screening company.

"But you're not seeing the same level of depth of the searches that you would see as an employer," Morris said. "They don't have the money, even though I would say that they have the same, if not greater, liability."

And as the screening has increased, volunteers have raised questions about privacy and whether such inquiries would have a negative impact on credit scores. Though inquiries from employers and volunteer agencies appear on the reports of consumers, they are considered "soft pulls" and do not negatively affect credit scores.

"A lot of people get confused when they see the words consumer reports," Morris said. "A lot of people confuse those words with credit reports. So they think automatically that by them signing that they can run a credit check. In many cases, that authorization does allow these companies to do that credit check, however, it usually is not the case that one gets done."

Formal objections
One group of volunteers formally objected to the American Red Cross's 2006 policy of screening the credit histories of some volunteers.

"You're being asked to give blanket permission to them to gather anything from your past, present, future, from anybody, anything, anywhere, whether it was economic, employment or education, and that's where the glitch was," said Allen Pitts, a spokesman for the Amateur Radio Relay League, which represents 60,000 certified radio operators.

The backlash was great enough to convince the American Red Cross to reverse its policy the following year. The relief agency continues to use a third-party screener, but no longer checks the credit histories of its volunteers.

"It's a balancing act, because you don't want to invade the privacy of your volunteers and you want to trust your volunteers upfront," said Laura Howe, a spokeswoman for the American Red Cross. "But you also want to make sure that you're getting honest people, who are not going to hurt the clients that you want to serve."

Published: September 24, 2010

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