Influencers and Charity Leaders Do An About Face

by Gary Snyder

We have seen a remarkable change in the charity sector.

The Washington Post expose,  "Inside the hidden world of thefts, scams and phantom purchases at the nation’s nonprofits", immediately brought out some allegations as to the article's veracity.

The sector leaders were furious and charged that the story was selective in its approach; that it was a "few bad apples"; that it overreached; that it had a slanted presentation; that it was ill-informed and negative; that it was false and misleading; that the press needed to better understand how the sector works; that the article was salacious; and that fraud in nonprofits was not a problem.

A scathing depiction of America's 50 worst charities in the Tampa Bay Times preceded it by a couple of weeks.

Out of humiliation, a stunning reversal by charity leaders took place. They rapidly changed their views for two reasons.

First, Congress became irate and promised to hold Congressional hearings on charity fraud. Senator Charles E. Grassley, ranking member of the Judiciary Committee, said that "Tax-exempt dollars are meant for tax-exempt purposes, not bankrolling a personal Champagne lifestyle." This was representative of other Congressional leaders sentiments. Finger pointing by charity leaders that the fraud problem was, in part, the responsibility of Congress might also have precipitated the Congressional heated response.

Secondly, the unveiling of immense fraud with no persuasive solutions by charity leadership was profoundly embarrassing. The crush of the public’s high expectations caused a palpable backlash. It pricked the sensibilities of all donors---big and small. The outrage called for needed change in nonprofit behavior.

A major focus of the outcry was that the dysfunctional charity leadership consigned the sector to a precipice. The leadership's denial, for more than decade, has now put the trust of the American people in serious jeopardy.

Unlike the leaders initial response, virtually all sided with the investigative reports.  

The Post article resulted in an outpouring of press outlets from all regions of the country. This was not a rare incident. It showed 1,000 now-highly visible instances of charity fraud. This was a small sampling of the 1.6 million charities and a much larger $41-51 billion national fraud problem endemic to the charitable sector.  

One leader best illustrated the turnabout.  He initially charged that there was no nonprofit fraud as highlighted in The Post story. Just a few days later, he saw the winds turn against him and with significant pushback He walked back his previous position and started his column by saying "The Washington Post's investigative series on asset diversions in nonprofit organization has been a tremendous success."  

Another dismissed the notion that nonprofits were the perpetrators. A few days later that same leader penned an article suggesting that that nonprofit leaders should renew their resolve…and take this seriously. Nonprofit board members, leaders, funders, volunteers, donors and regulators are in this together, so take proactive steps to prevent and insure that nonprofits are living up to the high standards the public expects and deserves.

Despite their professed turnabout, the leaders have no remedy for addressing the problem. Now, with some acknowledge of the explosion in nonprofit fraud, hopefully the sector will embrace much-needed change. If not, the solution will be in the hands of less friendly regulators.

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: Washington Post, Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, 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, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)