Washington Post, Inside the Hidden World of Thefts, Scams and Phantom Purchases at the Nation’s Nonprofits:
A Washington Post analysis of filings from 2008 to 2012 found that ... more than 1,000 nonprofit organizations that checked the box indicating that they had discovered a “significant diversion” of assets, disclosing losses attributed to theft, investment fraud, embezzlement and other unauthorized uses of funds. The diversions drained hundreds of millions of dollars from institutions that are underwritten by public donations and government funds. Just 10 of the largest disclosures identified by The Post cited combined losses to nonprofit groups and their affiliates that potentially totaled more than a half-billion dollars. ...
The Post found that nonprofits routinely omitted important details from their public filings, leaving the public to guess what had happened — even though federal disclosure instructions direct nonprofit groups to explain the circumstances. About half the organizations did not disclose the total amount lost. The findings are striking because organizations are required to report only diversions of more than $250,000 or those identified as having exceeded 5 percent of an organization’s annual gross receipts or total assets. Of those, filing instructions direct nonprofits to disclose “any unauthorized conversion or use of the organization’s assets other than for the organization’s authorized purposes, including but not limited to embezzlement or theft.”
As part of its analysis, The Post assembled the first public, searchable database of nonprofits that have disclosed diversions.
Among the 1,000 nonprofit organizations that reported a “significant diversion” of assets are:
- American Society of International Law
- Columbia University
- Drake University
- Georgetown University
- Legal Aid Bureau of Baltimore
- Legal Aid Society of Columbus
- National Association of Women Lawyers
- New York University
- St. John's University
- University of Miami
- University of Pittsburgh
- Vassar College
- Wesleyan University
- Yeshiva University
Washington Post, Lawmakers Press IRS Nominee on Reports of Charity Theft, Call for Greater Oversight:
President Obama’s nominee to head the embattled IRS said Thursday that, if confirmed, he would launch an inquiry into nonprofit organizations that have lost millions of dollars to financial wrongdoing and failed to disclose the circumstances to donors and law enforcement.
Nominee John Koskinen’s remarks followed concerns voiced in recent weeks by state and federal officials regarding what are known as significant diversions of assets. Members of Congress have said they are troubled that accounts of multimillion-dollar losses have come to light through news media reports and not from IRS enforcement actions.
“I think that the IRS should take advantage of the many sources of information that come to its attention,” Koskinen wrote in response to questions submitted to him this week by the Senate Finance Committee. “Reports such as that in The Washington Post provide important insights into areas that may have gone unnoticed or have been overlooked. If confirmed, I will look into these issues.”
The Post reported this year that it had identified more than 1,000 nonprofit organizations that in recent years disclosed on annual tax returns that they had suffered significant diversions — many of them acts of fraud and embezzlement carried out by insiders at the organizations.
The diversions highlighted in the articles totaled hundreds of millions of dollars. But the newspaper’s investigation also found that, in violation of IRS reporting rules, many of the organizations failed to include in their disclosures the amounts they lost and other key details.
Sen. Charles E. Grassley (R-Iowa) responded by opening an investigation into legal issues related to the diversions. Sen. Tom Coburn (R-Okla.) asked the Government Accountability Office to look into many of the same issues.