Thursday, January 2, 2014

My Annual Note: Charity Fraud-A Remarkable Year

To All Subscribers:

Interest in charity fraud has swelled. The emphasis changed from the breath to the depth of the problem leaving the donor with a better understanding that there is a explosive problem.

First came the belated admission by the Internal Revenue Service that there was a significant amount of diversions of assets from charities. Despite promises that it would address the issue in a timely manner nothing has been done for over two years.   

Then came the unveiling from several media sources that charity fraud had become a serious problem.

The Tampa Bay Times' "America's Worst Charities" series noted that about a billion dollars raised by solicitors only a small fraction ended up at the charity.

Charity regulators have done little to stem the tide. Charity leaders had basically no interest in the subject.

Just weeks thereafter the Washington Post broke a stunning report on 100 charities (just a small percentage of the 1.6 million charities) diverting funds in the neighborhood of half-a-billion dollars. 

The national media feasted on the Washington Post investigation, in whole or part. It was repeated in virtually ever-large newspaper in the country. Some local reporters conducted similar investigations and gained similar results… like "IRS to Nonprofits: Where Did The Money Go?" 

Others became interested, too. Three leaders from Congress are planning hearings based on the Post stories. Several state attorneys' general are actively looking at nonprofit fraud. 

But there was a spirited defense of the status quo (herehere here) by blaming the media, regulators and lawmakers. They were quickly debunked.    

Nonprofit Imperative was able to assist in these and many other investigations..with more in the works.

Still other frauds continue, for example, with an annual fraud award going to
LEEP, the Law Enforcement Education Program-an affiliate of the Police Officers Labor Council union- spent only 3.1 percent of its $2 million in revenue on programs or services. The small Troy (MI) charity has once again (Missouri; now Oregon) won the top spot on an attorney general’s list of the nation’s worst charities.

These investigations reflect a small fraction of charity fraud. Despite denials by those that we have entrusted to erase the problem, nonprofit fraud has increased each year since Nonprofit Imperative has begun keeping track. Evidence can be seen in our twice-monthly e-newsletter (which ends up totaling almost 200 pages annually), our blog (with 60,000 hits last year), our tweets, as well as two books---Nonprofits On The Brink and Silence, The Impending Threat To The Charitable Sector.

However, lets end this letter on a more positive note:

Have a safe, happy and fulfilling New Year.

P.S. And, thanks for all the tips with a special thanks to the investigative reporters that work so hard to improve the sector.


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: 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,, 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,, 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,, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization),, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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