To the Editor:
After reading the letter from Diana Aviv (“Nonprofit Leader Condemns Unethical Use of Charities,” August 15) on the current status of unethical use of charity donations, I think a little perspective on charity malfeasance may be helpful.
Several studies, as well as watchdogs, have pegged the unlawful acts at $51-billion.
About a year ago, the Internal Revenue Service acknowledged that there is a “significant diversion” (embezzlement or theft) of charitable assets, far beyond its expectations.
Various studies have indicated that the rate of charity fraud far exceeds that of both the private and government sectors.
Yet we have not heard anything from the leadership of philanthropy condemning such practices.
Among those who share the blame for not doing enough to deal with fraud:
  • State attorneys general, whose role in regulating the sector has eroded and who have been relegated to becoming a party that must be put on notice. Most attorneys general do not have resources to do their jobs. This situation may be changing in some states, however.
  • The IRS, which says it is looking for the relationship between good governance and tax compliance. Its current morass clearly forebodes little reason for optimism.
  • Congress, which wants to look tough in its monitoring of charities. There is very little oversight over the hundreds of billions of dollars of taxpayer money that nonprofit groups get from the federal government. Congressional representatives focus on the agency du jour and then move on to another issue that will help get them reelected.
  • Judges and prosecutors, who undertake only limited enforcement action. Prosecutors, including attorneys general, hold highly political positions. Their decisions as to whom to prosecute or how aggressively to prosecute are frequently based on political considerations.
  • Politicians and other public officials who are supposed to protect our interests have betrayed our trust by being deeply involved in nonprofit fraud. Nonprofit organizations are being used as a “pass-through” for elected officials and corporate players.
The time is long overdue to seek solutions to the systemic failure to address the misuse of philanthropy’s assets.
It will take a partnership of everyone to participate in a public conversation in facing formidable challenges.
Gary Snyder
Nonprofit Imperative
West Bloomfield, Mich.