Thursday, April 26, 2012

IRS’ Validation of Charity Fraud


by Gary Snyder

The fascinating, but not surprising, Internal Revenue Service research report adds to the overwhelming evidence that there is 'significant diversion' of charitable assets. This study is the latest in a series of studies that highlights this abuse.

Because the report is based on self-reporting and does not include the IRS form 990s that need additional information, are incomplete and are only those that passed 'technical screening’, the IRS study results reflect a small percentage of a much larger problem. The gravity of the IRS diversion/governance study is only part of the problem.

The study’s underpinnings point to why the problem is so vast. It shows the following:

• only 29% of the perpetrators resulted in criminal or civil charges;
• just 16% ended in incarceration or probation;
• only 3% resulted in fully-paid restitution;
• just 4% ended in partial restitution

The likelihood of getting caught and suffering consequences is extremely remote.

The diversion issue is further exacerbated by no acknowledgement of the crisis by charity leaders and regulators despite academics, private consultants and public officials noting that it is a major problem.

With the spotlight once again on this abuse, let’s hope that all will coalesce and address this compounding problem.










Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, , Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more • Nonprofits: On the Brink (iUniverse, 2006)
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