Monday, October 24, 2016

Nonprofit Imperative Mid-October e-newsletter

Nonprofit Imperative
your nonprofit browser
    October 2016

The monthly newsletter dedicated to:
  • exposing the crisis in nonprofit fraud leadership…a crisis of pervasive and monumental waste, fraud, abuse, mismanagement, and malfeasance throughout the charitable sector which costs taxpayers and contributors tens of billions of dollars annually; and,
  • seeking reforms that will restore the public’s lost confidence in the sector.
What’s Included:
Skunk of the Month:
Charity Regulations Not Working; Vet Charity Fraud; Sandy Hook Charity Fraud…more
Breaking the Silence:
Trump Foundation Under Scrutiny
Charity Check Up:
Children’s Services
A Thought or Two:
Principle For Charities To Live By
Nonprofit News-In Case You Missed It:
Univ. of Louisville; Armed Services Foundation …more
Political/Official Chicanery:
VA; MN; KS; ME; NC; NB; WA; IL; OK; CA; UT; NY; MI …more
What Do You Think?
·       To do good, donors must do their homework
·       Give without being taken

…only 20 percent of respondents believe their foundation accurately understands what it has accomplished for beneficiaries, and not quite half believe their grant maker knows how its work has affected grantee organizations. (
Evaluating charities currently not rated (charitynavigator)                                                    ---------------------------------
Nonprofit think tanks are rife with conflicts of interest (New York Times)
 "Don't give to the American Red Cross"…. These feelings have been bolstered by a widely circulated investigation by NPR and ProPublica, which found that the Red Cross grossly mismanaged its response to Haiti's 2010 earthquake, one of the worst natural disasters in the history of the Western Hemisphere. (washington post)
Nonprofit fraud experts caution that charity scams are commonplace after every natural disaster. Be careful!!! (barrons)
Skunk of the Month…
     “They came to do good and they did very well indeed (for themselves).”

Skunk of the Month is the twice-monthly designation made by Nonprofit Imperative, the organization dedicated to eliminating waste, fraud, abuse and mismanagement in nonprofits and government. The Skunk of the Month award is given to charities and government officials who show blatant disregard for the interests and trust of contributors and taxpayers. This month’s example is:ƒŽ‡ƒ•ˆ‹•
Studies of Charities Regulation and Oversight of Nonprofits Is Not Working, Is Duplicative and Fragmented
Major findings include the following:

·       No single state law of charities oversight exists; instead, oversight involves a complex mix of substantive areas, including charitable trust law, governance, criminal law, solicitation and registration requirements and compliance, corporate transaction review, and conservation easements.

·       Organization and staffing of state charity offices vary greatly across the country; in 41 percent of states one office has primary responsibility, but in 59 percent of states responsibility is shared with other agencies or offices.

·       Within an attorney general’s office, 13 jurisdictions have a charities bureau, and 14 jurisdictions house charities oversight within the consumer protection division of the office.

·       Most registration oversight is lodged in state attorneys’ general offices (21 states), followed by secretary of state offices (15) and other state - level charity offices, typically, consumer affairs or business/financial regulation (8).

·       Lawyers and non -legal staff who oversee charities number approximately 355 in the 48 reporting jurisdictions.

·       Thirty - one percent of jurisdictions have less than one full- time – equivalent staff, 51 percent have between 1 and 9.9 full – time - equivalent staff, and 19 percent have 10 or more full – time - equivalent staff.

·       Training state charities staff is a mix of internal and external provision with the smallest offices less likely to provide any training and the largest offices providing in - house training

This has resulted in fragmented oversight of nonprofits in the United States. Another study has raised concerns and has recommended that improvements need to take place because the best practices (one-size-fits all) approach simply does not work.
The IRS is starved for resources, both financially and politically. (kentlaw)
Two Vet Charities Are A Small Snippet Of A Huge Problem

Leaders from two veterans groups facing embezzlement charges (source)

Sandy Hook Charity Conviction

“to help raise funds for increased school safety, families of victims, memorials to teacher heroes, awareness, and prevention in schools across America” was the mission of the Sandy Hook charity, 26.4.26 Foundation. Instead of using all of the donated funds to support its purported mission, the agency founder used $28,657 of donated funds to enrich himself and to support his personal training business, the court documents state. Federal officials arrested the founder in Tennessee on six counts of wire fraud on February 13, 2015. Bruce pleaded guilty to one count of wire fraud on May 12, 2016.
Breaking the Silence:
Trump Foundation Under Scrutiny
The Donald J. Trump Foundation spent $258,000 to resolve legal disputes involving its namesake founder’s for-profit companies, writes Washington Post.
The New York Times reports that the organization — which solicited donations nationwide to support veterans in connection with a January rally hosted by the Republican presidential candidate — is not registered to raise money in 38 states that require charities to do so. Some $1.67 million of the $5.6 million raised via the event in Iowa consisted of online donations routed through Mr. Trump’s foundation, which has come under media scrutiny for its unusual operation.
Donald Trump bought a painting of himself at a charity auction in 2014, making the purchase using a check drawn on the Trump Foundation. Media inquiries about just how the foundation used the painting went unanswered. A Univision news anchor found the painting last week: It was hanging on the wall of the Champions Bar and Grill at the Trump National Doral golf resort in Florida. In short, “a portrait paid for by a charity was decorating the wall of Trump’s for-profit business.” Trump campaign adviser said its being stored. The IRS regulations governing private foundations (like the Donald J. Trump Foundation) are more strict than those applied to public charities because the more self-contained nature of private foundations is believed to make them more vulnerable to bad acts by insiders. (washingtonpost)
nytimes opinion on Trump charities.
The foundation — sustained for years by donors outside the Trump family — never obtained the registration that New York requires to solicit money from the public, state officials said. Charities as large as Trump’s must also submit to an annual audit that asks, among other things, whether the charity spent funds for the personal benefit of its officers.  Read more
State Attorney General Orders Trump Foundation to Cease Raising Money in New York (NYT)
Charity Check Up:
PA. Mental Health Services Hit With $600,000 Theft Over 12 Years
A woman was arrested after she allegedly stole from a Philadelphia nonprofit that serves children. She is charged with theft and embezzlement. 
She was the director of Health and Management at Northern Children’s Services (NCS), a nonprofit organization that provides mental and behavioral health treatment services for children. As director, she verified the accuracy of consultants’ invoices and submitted them for payment. The executive is accused of preparing consulting invoices for relatives and friends who were never consultants for NCS. She also allegedly prepared invoices for people who were consultants for NCS but for work they never performed. She then allegedly forged the names of the recipients to cash the checks.
Officials say she stole approximately $607,067 from NCS between December of 2002 and April of 2014. 
A Thought or Two:
RAY DALIO at Bridgewater Associates shares some thoughtful fundamental life principles that are certainly applicable to today’s charitable environment. We will present one principle each newsletter. (principles)

Appreciate Open Debate

Does somebody keep forwarding you this newsletter? Get your own copy. It's free! Sign up here. Send tips/stories to Nonprofit Imperative. Follow us on our blog or on Twitter---Nonprofits News

Nonprofit News…
In Case You Missed It:
1.     The University of Louisville Foundation accepted the resignation of James Ramsey as its president in a move that appears to reduce the chance of a lawsuit where $38 million in payments seemingly took place.
2.     The former executive director of the Armed Forces Foundation was indicted on federal charges stemming from a scheme in which she allegedly stole $600,000 from the non-profit charity, defrauded donors, and lied to the Internal Revenue Service (IRS) and the public about her salary and benefits. The indictment also alleges that she took the foundation’s money for her own personal use and to pay her for-profit business expenses.
3.     A fake GoFundMe account in the name of recently slain Detroit Police Sgt. Kenneth Steil organizer and his mother were arrested for fraud.
4.     Breast Cancer Charities of America/Help Now Fund received almost $45 million in public donations since it began in 2009. But its Help Now Fund has only handed out just over $187,403 to women to help pay their bills. That's less than 1 percent of the $45 million it's collected in donations.
5.     A nonprofit has dissolved after an investigation into the juvenile court system ensnared several of the organization’s staff members in criminal conspiracy charges. Reconnecting Families filed paperwork to disband in July, which became effective Sept. 13, according to state records. The group's website is now gone, but a cached page from May 2015 gives a description of what it did: "Reconnecting Families partners with the Cobb County community, court system and academic sector to provide prevention programs and treatment to offset the impact of drug addiction on the lives of children, teens and families." It offered not only scholarship and GED programs, but tangible goods like furniture, clothes and diapers people in court dealing with juvenile, drug and family issues. The group incorporated in November 2007. The Atlanta Journal-Constitution previously reported on the group’s troubles. New court administrator Laura Murphree began the investigation in July after a "whistleblower outcry by several individuals working in and with the court system" alerted her to misuse of grant money. From there, prosecutors audited the books. The audit led to a 27-count grand jury indictment on federal racketeering charges in December that accused four people — including former executive director, a court administrator and a former contractor. The charges included racketeering, theft and other felonies for being paid $168,000 of grant money for work that wasn't performed.
6.     A state ethics panel investigating Mayor Bill de Blasio’s political nonprofit organization has served a sweeping subpoena on City Hall seeking communications among the mayor, his aides, the nonprofit, its donors and consulting firms that worked for it, people with knowledge of the matter said.  The scope of the subpoena suggests a widening of the investigation by the State Joint Commission on Public Ethics, which enforces state lobbying laws and has been focused on whether the group, the Campaign for One New York, illegally lobbied the city in 2015.  (nytimes)
7.     Americans donated a record $373 billion in 2015, with most of that coming from individual donors, according to Giving USA, the Giving Institute and Indiana University Lilly Family School of Philanthropy said in their publication, “Giving USA 2016: The Annual Report on Philanthropy for the Year 2015.”
8.     Leonardo DiCaprio is aiding the investigation into a Malaysian embezzlement scam that involved his hit film about financial market fraud, "The Wolf of Wall Street," according to his spokesperson. The Hollywood star contacted the US Justice Department in July just after it filed a lawsuit to seize more than $1 billion in allegedly ill-gotten assets tied to Malaysian state investment fund 1MDB, including rights to the film, DiCaprio's spokesperson said.
9.     Every year, the IRS TE/GE Division issues a public work plan. The 24-page “Tax Exempt and Government Entities FY 2017 Work Plan” contains guidance about employee plans, government relations, and tax-exempt bonds, but willl focus on just a few elements that relate specifically to how the IRS proposes to interact with nonprofits and charities. (nonprofitquarterly)
We flagged these few examples of charity misdeeds:
1.     12-24 Club (WY) $56,000+
2.     Institute for International Sport (RI) $1 million
3.     The Providence Plan (RI) $600,000
4.     Hunger Free Vermont $116,000
5.     Fitzwilliam Historical Society (NH) $60,000
6.     Utility Workers Union of America Local 532 (MI) $60,000
7.     Kids Against Drugs/Big Bucks Bingo (WV) millions 
8.     Allied Community Resources (CTY) $400,000
9.     Adventist Medical Center (CT) $50,000 
10.  Hanford Pep Squad (CT) $3500
11.  Charity Angels AMBUCS (OK) thousands
12.   Bay Area Recycling for Charities (MI) $33,112
13.  Adventist Medical Center (CA) $50,000
14.  Holy Trinity Lutheran Church (PA) $175,000
15.  Sisters (OR) $250,000
16.  United Auto Workers Local 2317 (IN) $4500
17.  Ready to Learn Providence hundreds of thousands
18.  St. Mary’s Assumption in Bronson/St. Barbara in Colon  (MI) thousands
19.  American Legion Post 176 (AL)
20.  Catholic Charities of the Archdiocese of Washington more than $142,000
21.  U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA), Birmingham Health Care (BHC), Central Alabama Comprehensive Health in Tuskegee (CACH), and the Birmingham Financial Federal Credit Union (BFFCU) $16 million
22.  International Health Care Services (IHCS) (MN) millions
23.  Huntsville Rehabilitation Foundation (AL) more than ! Million
24.  Tender Care Human Services (NY) over $100,000
25.  Anne E. Moncure Elementary School’s PTO (VA)
26.  International Brotherhood of Electrical Workers chapter 386 (TX) $52,000
27.  Children's Hospital in Detroit (MI) $60,000
28.  Triangle Area Network $360,000
Political/public official chicanery (just a few):
1.            A former Virginia Tech employee is being investigated for embezzling $127,000 from the university’s foundation and the Virginia Flower Growers Association over a number of years, according to a search warrant.
2.            She will serve five years in prison for stealing more than $500,000 in excise tax money from the Anson (MN) Town Office, where she was tax collector for 33 years.
3.            The Butler County (KS) Sheriff says his office is investigating a possible embezzlement case in Towanda involving the town’s court clerk. 
4.            A former tax collector for the city of Westbrook (ME) pleaded guilty in federal court to embezzling $118,000 from the city.
5.            The former chief of Pembroke (NC) Rural Fire Department has been found guilty of embezzling more than $170,000 from the department, according to the Robeson County Sheriff’s Office, and received an active prison sentence.
6.            A report, issued by Nebraska State Auditor says Project Extra Mile's expenses included a $4,600 dinner that was more entertainment than business as well as too many meals for training events. The alcohol prevention group made a number of unpermitted and unreasonable purchases. The report also said the group violated federal regulations that prohibit lobbying with grant funds
7.            The former head of the Downtown Pasco (WA) Development Authority embezzled $53,000 more than investigators initially thought. The results of a state audit released show Michael A. Goins took $143,242 for his personal use between August 2013 and last November.
8.            Former Lawrence Mayor Jeremy Farmer pleaded guilty in federal court in Topeka to one count of interstate transportation of stolen funds stemming from his time as leader of the Lawrence food bank Just Food. Farmer had originally pleaded not guilty on Sept. 8 to the felony but changed his plea to guilty. Farmer admitted to the court that the theft of thousands of dollars took place while he was executive director of the nonprofit Just Food, whose mission is to feed the hungry in Douglas County.
He was hired at Just Food in 2011 and resigned from that position — and from his seat on the Lawrence City Commission — in August 2015. His resignation came about after it was revealed he had not paid more than $50,000 in federal and state payroll taxes on behalf of Just Food.
9.            Kankakee (IL) Valley Park District's former executive director, Roy Collins, has been indicted on two federal charges alleging that he started looting the district and its charitable foundation less than a year after he was hired July 2011. The charges span from early 2012 when prosecutors allege unauthorized credit card purchases started until early 2016 when prosecutors say Collins started creating false documents to conceal the theft from the Kankakee Valley Park Foundation.
10.         A former superintendent of an Oklahoma school district has pleaded no contest to a misdemeanor charge of embezzlement.
11.         A former executive at a San Diego-based Department of Defense contracting firm pleaded guilty to embezzling more than $825,000 from the company, the U.S. Attorney’s Office said.
12.         A former Altavista (VA) police chief will serve one year behind bars after being found guilty of forgery, embezzlement, and obtaining drugs by fraud.
13.         A Washington City  (UT) woman who resigned from her job as Kane County's treasurer amid an embezzlement investigation earlier this year has been charged in 6th District Court with four felony counts of misuse of public funds. She is accused of using her office to transfer property tax and justice court revenues from the county's bank accounts for the benefit of herself or another person in a series of unauthorized transactions between March 10, 2014 and January 11 of this year.
14.         Lisa S. Coico, the president of the City College of New York, the flagship of the largest urban public university in the country, abruptly resigned, a day after The New York Times contacted officials with questions about her administration’s handling of more than $150,000 of her personal expenses.
15.         A former executive director of the Bonita Springs Assistance Office who was ousted and accused of pocketing donations (took $47,844.21) meant to help people in need was arrested last week. Marjorie Kasell-Johnson faces second-degree grand theft and second-degree fraud charges, according to the arrest report and court documents. Both are felonies in Florida.
16.         A nonprofit Michigan organization linked with Republican groups acknowledged more than $500,000 in political spending in 2014, less than a month after the Free Press reported that it had earlier reported no political activity to the Internal Revenue Service for that year. In June, the Free Press reported that Citizens for Responsibility and Ethics in Washington (CREW) had filed complaints with the IRS against several social welfare organizations, including Michigan Citizens for Fiscal Responsibility, saying they had violated tax rules. In mid-July, Michigan Citizens for Fiscal Responsibility filed an amended 2014 return with the IRS, listing $501,987 in political activity, including giving $155,000 to Hardworking Americans Committee, a Super PAC spending hundreds of thousands of dollars on Michigan state House and Senate races; $135,000 to the Republican State Leadership Committee; and $75,000 to the Michigan Republican Committee.

Political/public official chicanery (just a few):

Readers, weigh in as to what you think…please continue the tips (they are very helpful)
Nonprofit Imperative gathers its information principally from media sources...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however there is money missing. These incidents include only a fraction of the estimated $40 billion of charity crimes. On rare occasions, there may be duplicates.
We’re noticed: Cites in various media:
Featured in print, broadcast, and online media outlets, including: Charity Navigator, Washington Post, National Enquirer, The Patriot-News, Vermont Public Radio, Miami Herald, New York Times, National Public Radio, Huffington Post, The Sun News, In Touch, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio,, Marie Claire, Ethics World, Tactical Philanthropy, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News,, Responsive Philanthropy Magazine, , Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle,  Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog,  National Coalition of Homeless Newsletter, The Michigan Nonprofit Management Manual,, CORP! Magazine, Crain’s Michigan Nonprofit,, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, VPR News, National Enquirer,
  • Silence: The Impending Threat to the Charitable Sector (Xlibris, 2011)
…”This book should be read by everyone. It will send a shiver down the reader's spine to think that people with little money to spare have given generously…”
  • Nonprofits: On the Brink (iUniverse, 2006)
  • The Michigan Nonprofit Management Manual, Governance Section
Our intent is to keep you informed.... You may be removed from our contact list and future mailings by emailing to with the word "remove" in the subject line.
Email:; 248/324-3700;
Gary Snyder is the author of Silence: The Impending Threat to the Charitable Sector (Xlibris, June, 2011) and Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. The book can be bought at,, Barnes and Noble (store)
© Gary R. Snyder, All Rights Reserved, 2016