The Central German Institute for Social Questions, or DZI, has withdrawn its endorsement of the German branch of UNICEF as a charity. The group now has a lot of work to do to get back in good graces.
The children's charity wasn't sufficiently forthcoming about its finances
The DZI said it was taking the action after UNICEF Germany repeatedly and falsely claimed it did not pay commission fees to individuals who helped organize large donations. UNICEF did in fact pay such fees in the years since 2005.
The DZI also criticized a particular commission, paid in conjunction with a donation from a supermarket chain, as being unjustified.
"By paying a commission of 30,000 euros ($45,000) without getting any demonstrable service in return, UNICEF Germany has violated the principle of the economical and careful use of funds," the watchdog organization said in a press statement released on Wednesday February 20.
In addition, the DZI said the charity needed to improve its management, directorial and supervision structure.
UNICEF Germany has been dogged for months by media reports about lack of transparency and wasteful spending within the charity. Earlier this month, the former Social Democratic state premier of Schleswig-Holstien, Heide Simonis, resigned as chair of the organization, and business director Dietrich Garlichs has also stepped down.
Simonis resigned amidst negative headlines
In its response to the DZI action, UNICEF Germany said it thought the punishment was too harsh.
"We know that grave mistakes were made, but the points criticized by the DZI were exceptional cases," the charity organization said in an official statement.
"We are already trying to learn from our mistakes and restructure the way we work. In general, UNICEF works carefully and responsibly. We'll do everything we can to ensure that such mistakes don't happen in the future."
The DZI currently gives its seal of approval to 230 charitable organizations that taken in some 1.4 billion euros ($2 billion) annually. Charities must re-apply for approval every business year.
But in its Wednesday statement, the watchdog said it would be tightening its criteria for approval to encourage more transparency in charities' annual financial reports.
And that means UNICEF Germany has its work cut out for it, if it is to regain its status as an official DZI-sanctioned charity in the next fiscal year.