- exposing the crisis in nonprofit fraud leadership…a crisis of pervasive and monumental waste, fraud, abuse, mismanagement, and malfeasance throughout the charitable sector which costs taxpayers and contributors tens of billions of dollars annually; and,
- seeking reforms that will restore the public’s lost confidence in the sector.
Sandy Hook Charity Conviction
The successful collaboration between the FTC and state charity regulators sent a clear message that both federal and state regulators will not tolerate deceptive fundraising practices. Moreover, charitable organizations that utilize gift-in-kind (GIK) programs should make sure that their valuation and ownership transfer of donated goods is proper and well documented, because such practices were at the center of the multi-state investigation. During the public session, regulators acknowledged that by working together, they were able to leverage resources and achieve an outcome that a single agency or regulator would not have been able to pursue on its own. Federal and state regulators are communicating more, sharing information with each other, and using technology to work together more efficiently and effectively. This means that, undoubtedly, there will be more multi-state cooperation among federal and state regulators to tackle perceived bad actors.
Initially, two organizations filed suit to enjoin the states from collecting their donor information. The charities argued that being compelled to disclose this information would result in a chilling effect, reasoning that donors would shy away from making contributions, which would cause the charities to lose support. Early on in the litigation, courts held that the states had every right to the charities’ donor information and denied injunctive relief.
Then a third organization joined the fray with a similar plan, but in the midst of a wending judicial path, a different course was forged. The organization was granted a full trial and walked away with a win on the merits. While this signaled a temporary change in fortunes for the affected charities, the inconsistent judicial results have left all parties with more uncertainty than when they began. Now, this nascent line of jurisprudence is muddled, and it is up to either the courts or Congress to bring resolution and consistency to this sensitive Constitutional issue.
She was the director of Health and Management at Northern Children’s Services (NCS), a nonprofit organization that provides mental and behavioral health treatment services for children. As director, she verified the accuracy of consultants’ invoices and submitted them for payment. The executive is accused of preparing consulting invoices for relatives and friends who were never consultants for NCS. She also allegedly prepared invoices for people who were consultants for NCS but for work they never performed. She then allegedly forged the names of the recipients to cash the checks.
The charity is to permanently close and pay damages; the president and founder return severance, pay damages, issues an apology, and banned nationally from using charitable assets. (EO Tax Newsletter)
- Silence: The Impending Threat to the Charitable Sector (Xlibris, 2011)
- Nonprofits: On the Brink (iUniverse, 2006)
- The Michigan Nonprofit Management Manual, Governance Section