Nonprofit Fraud: Kids Lose; Malfeasance Wins

by Gary Snyder

The D.C. Children & Youth Investment Trust Corp., a government-funded nonprofit group, won’t say how they spent all of that cash…$25 million worth of the city’s money. 

As NI readers may recall, the agency was entangled in a theft scam that saw a D.C. Council member go to federal prison. The scandal raised questions about the trust’s oversight of grant funding apart from the theft. Based on a review of previous IRS filings, several grantees funded by the trust in recent years lacked nonprofit status or basic incorporation papers. One media outlet reported last year that the group had paid out more than $400,000 to rent a giant, heated tent during festivities for President Obama’s 2008 inauguration.

The D.C. Children & Youth Investment Trust Corp. failed to identify any grantees in its latest annual tax filing with the IRS, thus making it impossible to draw conclusions about the finances of the children’s organization. While reporting $25.7 million in funding for the latest reporting period, spanning October 2010 to September 2011, the trust leaves blank entire sections regarding annual expenditures, including compensation, fundraising fees and grant payouts. One observer suggests that the IRS submission will be declared incomplete.

Clearly doing wrong has its benefits. Among the few expenditures it did disclose, the trust reported paying $150,000 to its former chief executive, and $100,000 more to three other executives. (Washington Times)

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 (2006) Silence: The Impending Threat to the Charitable Sector (2011)