This section is difficult for us to write but we think it is important. Not for profit groups spend a lot of time telling you good news about their work. Much less effort is made to tell you about things when they go poorly. We include a sample of publically reported NFP
problems so you can begin to see some of the risks involved in philanthropy. The vast majority of NFPs are reputable, but some, like the ones below have problems that you need to know about before you contribute. Keep in mind:

•      We have not independently researched the issues that are reported in these articles.

•      These articles represent a very small percentage of the NFP organizations in the US. While the list looks long it does not mean that assumptions should be made about all of the other NFPs.

•      Even if one person in an organization is guilty of malfeasance it does not mean that the organization is bad or that the other employees are bad.

•      It is possible that an organization could be stronger after an article like this than they were before. Modern NFPs can be extremely complex and problems do happen. Reputable organizations accept criticism when it is true, correct the problem, and move on in a stronger state than they were in before.

•       The larger issue in the NFP world has to do with results. Even if an organization is well managed it does not necessarily mean they are making a difference and accomplishing their mission. This part of the story is rarely reported.

However, these articles are useful in demonstrating the kinds of problems that can happen and they are a starting point for defining the leading indicators that should be evaluated during a due diligence review.

81. Rabbi is accused of stealing millions from his congregation. NYT (12/20/13), http://www.nytimes.com/2011/12/21/nyregion/rabbi-pintos-followers-blame-aides-for-missing-millions.html?pagewanted=all
82. Brooklyn politician is accused of running a network of nonprofits that is riddled with fraud and incompetence. NY Daily News (9/15/10), http://www.nydailynews.com/news/crime/probe-finds-brooklyn-dem-vito-lopez-non-profit-empire-riddled-fraud-article-1.440947
83. Madonna wants to sue her own foundation leaders to recoup $3.8 million in squandered funds.  Fox News (3/29/11), http://www.foxnews.com/entertainment/2011/03/29/beware-celebrity-charities-madonna-malawi-chairty-fiasco-shows-risks-unproven/
84.  Reaping Millions in Nonprofit Care for Disabled: NYT, http://www.nytimes.com/2011/08/02/nyregion/for-executives-at-group-homes-generous-pay-and-little-oversight.html?pagewanted=all&_r=0
85. Enormous salaries for some religious leaders causes concern. LA Times (11/12/07), http://articles.latimes.com/2007/nov/12/nation/na-prosperity12
86. Loopholes and lax oversight permit nonprofits to pay CEOs at any level they want. The Charlotte Observer (12/20/09), http://www.newsobserver.com/2009/12/20/249122/ceos-profit-from-nonprofits.html
87. DC association accuses administrative assistant of stealing $5.1 million, The Washington Post, 11/25/13, http://www.washingtonpost.com/investigations/prosecutors-say-maryland-woman-embezzled-51-million-from-dc-nonprofit-group/2013/11/24/97e1ecf0-53bb-11e3-a7f0-b790929232e1_story.html
88. An unauthorized Sandy disaster relief group has raised $1 million without being a registered or legitimate 501(c) 3 charity.  Asbury Park Press (2/12/13), http://www.app.com/article/20130211/NJNEWS/302110108/State-probing-Sandy-charity?nclick_check=1
89. The N.J. auditor is challenging 9 foster care charities after it was discovered that $4.2 million had been spent on bonuses, country club parties, and family related contracts.  NJ.com (2/13/13), http://www.nj.com/politics/index.ssf/2013/02/nine_nonprofits_targeted_by_nj.html

1. The Washington Post reports that “diversions” (embezzlement and theft) of resources from nonprofits are much more common than the public realizes. Over a 4 year period they identified more than 1000 organizations that had such losses and they found that the nonprofits routinely omitted important information about those losses in their tax filings. Some of the losses were for millions of dollars. Oct. 26, 2013, http://www.washingtonpost.com/investigations/inside-the-hidden-world-of-thefts-scams-and-phantom-purchases-at-the-nations-nonprofits/2013/10/26/825a82ca-0c26-11e3-9941-6711ed662e71_story.html
2.  The Plain Dealer of Cleveland Ohio reports the conviction of a scammer who stole $100 million from donors who thought they we assisting U.S. veterans. Nov 14, 2013. http://www.cleveland.com/metro/index.ssf/2013/11/jury_finds_bobby_thompson_verd_1.html
3.  A Long Island businessman and community leader have been charged with stealing more than $7 million from a social service agency they led. New York Times. Nov. 14, 2013. http://www.nytimes.com/2013/11/15/nyregion/insurer-charged-with-theft-from-a-charity.html?_r=0
4.  New York Times reports on the 23 felony convictions of a scammer who raised $100 million through telemarketing for a fraudulent charity. Nov. 25, 2013. http://www.nytimes.com/2013/11/26/opinion/the-charity-swindle.html?_r=1&
5.  A nonprofit in Los Angeles is accused of raising more than $1 million and then closing before the funded project was completed. Los Anglees Times. Dec. 3, 2013. http://articles.latimes.com/2013/dec/03/local/la-me-kabbalah-20131204#axzz2mbW3QKmB
6. A nonprofit executive in Queens has been accused of stealing $350,000 from federal, state, and city grants to pay for personal expenses. Daily News. Dec 5 2013. http://www.nydailynews.com/new-york/queens/queens-nonprofit-angeldocs-stole-350-000-authorities-article-1.1538726
7.  A recent survey by Fairleigh Dickinson University found that only 13% of Americans know that the NFL is a nonprofit. Bloomberg. Jan 24, 2014. http://www.bloomberg.com/news/2014-01-24/americans-think-nfl-should-pay-taxes.html
8. Research conducted by the Attorney General of CA discovered that $300 million dollars were raised by telemarketers for charity in CA during 2012, but only 35% actually went to the charities. The rest went to the for-profit telemarketers who raised the money. Orange County Register. Jan. 31, 2014. http://www.ocregister.com/taxdollars/charity-599836-charities-percent.html
9.  A former regional director for the Pop Warner scholarship program has admitted to stealing hundreds of thousands of dollars from the program. Asbury Park Press. Jan. 28, 2014. http://www.app.com/article/20140127/NJNEWS14/301270058?nclick_check=1
10.  Two men in NJ were found guilty of raising money for a bogus charity in the name of the victims from the 9/11 attacks. Asbury Park Press. Jan. 7, 2014. http://www.app.com/article/20140106/NJNEWS14/301060087/

11. Tampa Bay Times reports on the poor accounting practices used by some gift-in-kind charities. In a recent study they found that 15 organizations had claimed to deliver $40 million dollars worth of goods to Guatemala, but little of it could be accounted for. Jan 24, 2014. http://www.tampabay.com/news/business/no-accounting-for-40-million-in-charity-shipped-overseas/2162553
12.  The Evansville Courier Press has reported that in some cases professional solicitors in IN keep as much as 95% of what they raise on behalf of a charity. Jan. 11, 2014. http://www.courierpress.com/news/2014/jan/11/records-solicitors-keep-bulk-money-raised/
13. The Tampa Bay Times and the Center for Investigating Reporting wrote this article to call attention to what they consider to be America’s Worst Charities.  The 50 organizations listed are accused of spending 90 to 100% of their funds on fundraising over the past 10 years.  The amount of money raised was well over $1.3 billion.  June 6, 2013.    http://www.tampabay.com/americas-worst-charities/
14. This article exposes how some professional telemarketing firms keep the majority of the money that is raised and very little, if any, actually goes to the intended recipients.  The Telegram and Gazette of Worcester, MA.  Dec. 14, 2012 http://www.telegram.com/article/20121214/NEWS/112149608/-1/NEWS05
15. The Denver Post reports that a woman who founded a charity to help support the burn unit of the Children’s Hospital actually used the funds for her own benefit.  She received a 90 jail sentence, 10 years of probation, and a court order to return $250,000.  Dec. 20, 2012, http://www.denverpost.com/breakingnews/ci_22231882/woman-who-created-charity-scam-from-firefighter-calendar Denver Post
16. According to the Post-Standard of Syracuse, N.Y. officials announced on 12/20/12 the arrest of the former COO of the Peter Young Housing, Industry and Treatment charity.  The charges included the embezzlement of $200,000.  The charity has a 50 year history of providing job training for recovering alcoholics, drug addicts and other individuals. http://www.syracuse.com/news/index.ssf/2012/12/investigation_of_priests_nonpr.html
17. The NY Times reports that the recipient of a $29 million grant to provide half-way house services to ex-inmates falsified their application to receive the grant. Dec. 12, 2012 http://www.nytimes.com/2012/12/13/nyregion/at-federal-halfway-house-in-brooklyn-a-dubious-operator.html?_r=0
18. Scammers try to enrich themselves off of the tragic Connecticut shooting: Today News, 12/21/2012  http://www.today.com/news/scammers-try-exploit-connecticut-shooting-1C7703027?franchiseSlug=todaynewsmain
19. The Tampa Bay Times (12/27/12) reports on a charity executive that receives $1.2- Million in compensation from $10.2 million in state contracts.  The charity manages residential treatment beds, provides counseling and therapy to troubled children after they complete residential care, and has programs to divert kids from delinquency, but state officials were outraged to discover that 10% of their funds went to the chief executive. http://www.tampabay.com/news/politics/legislature/nonprofit-with-state-contracts-pays-its-top-exec-12m/1267912
20. Forbes reports 1/14/13 that Operation Compassion may have to reduce the amount of revenue they claim to have raised by $250,000,000.  The discrepancy comes from “numerous and persistent” mistakes that were made in the valuations of Gifts-in-Kind that are considered to be revenue by the IRS.  http://www.forbes.com/sites/williampbarrett/2013/01/14/charity-eyes-quarter-billion-dollar-write-down-in-value-of-goods-handled/

21. The Chronicle of Philanthropy (1.14.13) reports that the New York attorney general has leveled a $5.5 million penalty against the Executive Director and Board of Directors of a local charity for a lack of due diligence which led to the mishandling of funds.  http://philanthropy.com/article/Price-of-Board-Inaction-/136669/?cid=pt&utm_source=pt&utm_medium=en
22. USA Today 12/27/12 challenges the validity of the BBB’s Wise Giving charity ratings.   http://www.usatoday.com/story/money/personalfinance/2012/12/27/better-business-bureau-charity-ratings-donations/1636957/
23. The NYT (1.2.13) reports the death of the former top administrator of Flushing Meadows-Corona Park.  The administrator spent 17 years restoring the park that was the site of the World’s Fair in 1939 and 1964 but at the time of her death she was under indictment for the theft of up to $50,000 from the park funds. http://www.nytimes.com/2013/01/03/nyregion/estelle-cooper-former-park-administrator-accused-of-theft-dies-at-82.html?adxnnl=1&adxnnlx=1382111970-xHzaKa8LUm+9EJCbx+MUpQ
24. The Washington Post (12/27/13) debunks 5 myths about charities and giving. http://www.washingtonpost.com/opinions/five-myths-about-charitable-giving/2012/12/27/99cde18a-4de6-11e2-839d-d54cc6e49b63_story.html
25. MSN News (1/23/13) reports on a law suit that claims Scientology engages in fraud, deception and breach of contract in fundraising.  The lawsuit names several trusts and nonprofits which are linked to Scientology. http://news.msn.com/us/calif-couple-sues-over-donations-to-scientology
26. The Patriot-News of Central PA reports (1.31.13) a former employee of The Bon-Ton Store Foundation has been charged for allegedly stealing $1.2 million. http://www.pennlive.com/midstate/index.ssf/2013/01/former_bon-ton_stores_charity.html
27. The St. Louis Post-Dispatch (1/24/13) reports the sentencing of the treasurer of a local charity for stealing $209,000. http://www.stltoday.com/news/local/crime-and-courts/former-treasurer-of-cottleville-church-charity-gets-one-year-for/article_a72aa754-f68d-561d-adef-7a7e80db2998.html
28. A former N.Y. state Senator admitted she embezzled from a local charity she had founded. Bloomberg (1/30/13), http://www.bloomberg.com/news/2013-01-30/ex-n-y-lawmaker-admits-to-mail-fraud-conspiracy-correct-.html
29. A well know country music producer was charged with wire fraud and stealing hundreds of thousands of dollars by promoting a bogus charity album. Seattle Times (1/29/13), http://seattletimes.com/html/localnews/2020241287_musicianfraudxml.html?prmid=4939
30. NYT (2/6/13) reports that a judge has been asked to settle a dispute between Twombly Foundation Board members over unauthorized payments to treasurer. http://artsbeat.blogs.nytimes.com/2013/02/06/judge-asked-to-settle-twombly-foundation-dispute/?_r=0

31. Ex-N.Y. Senator files second guilty plea concerning theft of taxpayer dollars in the charities she managed. NYT (2/13/13), http://www.nytimes.com/2013/02/14/nyregion/ex-senator-shirley-huntley-pleads-guilty-in-2nd-fraud-case.html
32. A former financial director for the Red Cross in NY pleaded guilty to embezzling more than $274,000 from the charity. New York Post (2/27/13), http://nypost.com/2013/02/27/jailed-red-cross-honcho-used-charity-cash-for-nail-treatments-weight-watchers/
33. An ex-San Diego Mayor used money donated to a charity to cover his own gambling debts. Los Angeles Times (2/15/13), http://articles.latimes.com/2013/feb/15/local/la-me-sd-mayor-gambling-20130215
34. A review of 50 charities operated by professional athletes reveals that half of them spent less than 65% of revenue on the causes they support. The Boston Globe (2/24/13), http://www.bostonglobe.com/business/2013/02/24/nonprofit-game-many-athletes-post-losing-records/a0Eqoz6RUYORFhT0T0j0EO/story.html
35. The Atlanta Journal-Constitution (2/27/13) reports guilty pleas from the founders of Angle Food Ministries, http://www.ajc.com/news/news/local/founders-of-angel-food-ministries-plead-guilty/nWbyw/
36. NBC News – Rock Center reports (3/1/13) that 18 years after the Oklahoma City bombing a fund established to assist bomb victims still has $10 million while victims have been denied support for years., http://rockcenter.nbcnews.com/_news/2013/03/01/17136505-disaster-relief-dealing-with-oklahoma-city-bombing-fund-horrible-victim-says?lite
37. Ind. woman admits she stole $290,000 from a local charity. Evansville Courier & Press (3/4/13), http://www.courierpress.com/news/2013/mar/04/no-headline—garrison_court/
38. One million dollar donation from the people of SC never made it to Sandy hurricane victims. The Star-Ledger of Newark NJ (3/5/13), http://www.nj.com/news/index.ssf/2013/03/sandy_charity_faces_new_scruti.html
39. A charity’s Gift-in-Kind accounting practices draws scrutiny. The Chronicle of Philanthropy (12/10/13, http://philanthropy.com/article/A-Consultant-s/136233/
40. New accounting standards lead charities to drastically reduce revenue reports. The Chronicle of Philanthropy (9/18/11), http://philanthropy.com/article/Aid-Charities-Accounting/129025/

41. Vague accounting rules and insufficient oversight lead to misleading gift-in-kind values at many nonprofits. The Chronicle of Philanthropy (9/18/13), http://philanthropy.com/article/Multiple-Methods-of-Valuing/129019/
42. An international relief charity overstated its revenue by 1400%. The Chronicle of Philanthropy (4/26/13), http://philanthropy.com/article/Big-Relief-Charity-Says-It/138879/?cid=pt&utm_source=pt&utm_medium=en
43. Gift-in-Kind valuations obscure that fact that a local charity invests little of their cash revenue into their cause. The Chronicle of Philanthropy (2/24/13), http://philanthropy.com/article/Little-Money-of-Children-s/137439/
44. Ex-Employee at local Arts Center Admits $1.1-Million Theft: Atlanta Journal-Constitution (4/23/13), http://www.ajc.com/news/entertainment/former-woodruff-arts-employee-pleads-guilty-to-emb/nXTyN/
45. Sierra Leone charges 29 top health officials with embezzlement NYT (4/13/13), http://www.nytimes.com/2013/04/14/world/africa/sierra-leone-graft-charges-imperil-care-and-aid.html
46. An addiction treatment charity is accused of misappropriating $223,000 of state grant money. WSJ(4/24/13), http://online.wsj.com/article/AP0df5c6ecc43b4e2e90da218dca3e12f7.html
47. Fake breast cancer charity raises $10 million but only uses $48,000 on the cause.  The rest of the funds went to the fundraisers. New York Daily News (5/3/13), http://www.nydailynews.com/new-york/fundraisers-shut-scamming-10-million-article-1.1334717
48. A N.Y. woman is accused of claiming to have cancer to raise money for her drug habit. Associated Press/ WSJ (4/22/13), http://online.wsj.com/article/AP9cbd019ea05d4d94b88aaa01e6f18179.html
49. Ineffective regulation and weak sanctions allow the worst fundraising offenders to continue operations even after being caught.  The Tampa Bay Times (6/7/13), http://www.tampabay.com/topics/specials/worst-charities2.page
50. Over the past ten years the 50 ‘Worst Charities’ raised $1.3billion.  $1 billion went to the for-profit telemarketers, another large percentage went to executives, and a small percent went to the actual mission. Tampa Bay Times/ Center for Investigative Reporting (6/6/13), http://www.tampabay.com/topics/specials/worst-charities1.page

51. Boston man tries to bilk $2.2 million out of the relief fund for victims of the Marathon bombings. The Boston Globe (7/2/13), http://www.bostonglobe.com/metro/2013/07/02/south-end-man-charged-with-trying-steal-from-the-one-boston-fund-filing-for-benefits-for-aunt-who-died-years/SfuahzWytfM5sG4GY9o7ZP/story.html
52. Questions are raised about how taxpayer cash might be used to curry political favor through charity grants. New York Daily News (7/2/13), http://www.nydailynews.com/news/election/quinn-grants-examined-daily-news-article-1.1388842
53. Intertwined relationships between Board Members and grant seekers cause scrutiny at a NC development agency. The News & Observer of Raleigh NC (7/27/13), http://www.newsobserver.com/2013/07/27/3063360/rural-center-board-is-intertwined.html
54. Ex-SUNY Foundation Chief and a politician’s daughter have been charged with falsifying work records to conceal work being done for a political party and family members. Times Union of Albany (7/31/13), http://www.timesunion.com/local/article/Bruno-kin-accused-in-no-show-4698216.php
55. Finance manager for a PA nonprofit embezzled $700,000 to fund personal gambling addiction. Pittsburgh Tribune-Review (7/23/13), http://triblive.com/news/adminpage/4408743-74/allegheny-johnson-network#axzz2i61GLScX
56. Leader of NY nonprofit found guilty of stealing state grant funds. TimesLedger (7/23/13), http://www.timesledger.com/stories/2013/30/vanholmesplea_web_2013_07_23_q.html
57. Questionable expenses by college President causes serious review. The Boston Globe (8/18/13), http://www.bostonglobe.com/metro/2013/08/17/from-bangkok-hotels-cape-cod-clambakes-state-university-president-taste-for-high-life-catches-him/b1xMgdwKWEjG06j6DFYoxM/story.html
58. Founder of GA food charity was sentenced to 7 year prison term for federal money-laundering charges. The Chronicle of Philanthropy (8/30/13), http://philanthropy.com/blogs/philanthropytoday/defunct-ga-food-charitys-head-gets-7-year-prison-term/74107?cid=pt&utm_source=pt&utm_medium=en
59. Foundation trustees claim $60 million in fees for their labors. NYT (8/21/13), http://www.nytimes.com/2013/08/22/arts/design/rauschenberg-friends-seek-60-million-from-estate.html
60. The cause of supporting veterans attracts disreputable charities. NBC News (8/28/13), http://investigations.nbcnews.com/_news/2013/08/28/20235668-scoundrels-thieves-rip-off-artists-flock-to-veterans-charities?lite&ocid=msnhp&pos=5

61. The U.S. Navy Veterans Association raised $100 million but the charity was non-existent.  Former leader is now on trial. Tampa Bay Times (9/29/13), http://www.tampabay.com/news/courts/criminal/mystery-man-bobby-thompson-blames-cia-for-bogus-charity/2144548
62. Former labor leader Gets 33 Months for Union and charity-Linked Fraud. Los Angeles Times (10/7/13), http://www.latimes.com/local/la-me-freeman-20131008,0,678056.story
63. Sportsman group has applied for state grants and participated in lobby efforts but hasn’t filed a tax return as either a for-profit or nonprofit entity. Milwaukee Journal Sentinel (10/10/13), http://www.jsonline.com/news/statepolitics/embattled-sportsmens-groups-tax-status-murky-b9994367z1-223072991.html
64. D.C. officials charge leaders of charter school with the diversion of millions of dollars of public school funding. The Washington Post (10/1/13), http://www.washingtonpost.com/local/education/charter-school-officials-diverted-millions-lawsuit-alleges/2013/10/01/05fdc4f2-2aae-11e3-b139-029811dbb57f_story_2.html
65. In what appears to be a Medicaid scam 9 executives of local nonprofits were found to be on the payroll of a publically traded company.  The nonprofits were then paying the company for unspecified business services. Albuquerque Journal (9/8/13), http://www.abqjournal.com/259553/news/ari-zfirm-employed-nm-nonprofit-bosses.html
66. A N.Y. woman identified herself as a family member of a Sandy Hook shooting victim and set up a fake charity to raise money for her personal benefit. CNN (10/16/13), http://edition.cnn.com/2013/10/15/justice/newtown-charity-scam-sentence/
67. Pa. and Ohio sue a fundraising firm over deceptive police and firefighter appeals, Pittsburgh Post-Gazette (9/26/13), http://www.post-gazette.com/stories/local/region/state-sues-telemarketing-firm-firefighter-unions-705014/
68. Bank begins foreclosure process on cultural center after the nonprofit management failed to meet its obligations. Pittsburgh Tribune Review (9/27/13), http://triblive.com/news/adminpage/4783582-74/center-dollar-action#axzz2i61GLScX
69. Leader of influential NYC social service organization faces charges of embezzling $5 million.  NYT (9/24/13), http://www.nytimes.com/2013/09/25/nyregion/charitys-fired-chief-is-charged-with-stealing-millions.html
70. In 2011 eleven nonprofits paid their chief executive over $1 million.  At 78 other charities the CEO was paid $500,000 to $1 million. CNN Money (10/11/13), http://money.cnn.com/2013/10/10/news/nonprofit-ceo-pay/

71. Leader of a $300 million veteran’s charity was convicted of racketeering in scam Florida ‘charity’.   Almost none of the money raised went to veterans. NBC News (10/12/13), http://usnews.nbcnews.com/_news/2013/10/12/20927909-lawyer-convicted-of-racketeering-in-scam-florida-charity-for-veterans?lite
72. Popular DC charity benefit nets little for charity. Charities Still Get Little from Popular D.C. Comedy Benefit The Washington Post (9/30/13), http://www.washingtonpost.com/blogs/reliable-source/wp/2013/09/30/funniest-celebrity-in-washington-vips-still-rally-to-fundraiser-despite-little-aid-to-charity/
73. Former charity leader from Oregon is accused of taking $4 million. The Oregonian (10/21/13), http://www.oregonlive.com/portland/index.ssf/2013/10/feds_former_beaverton_charity.html
74. Four top Jewish charities are hit by scandals, fraud, and mismanagement. The Jewish Daily (10/25/13), http://forward.com/articles/185814/jewish-charity-scandals-tied-to-long-tenures-and-w/
75.  1000 nonprofits reported “significant diversions” of funds (fraud) between 2008 and 2012.  The total loss is over $500,000.  The Washington Post (10/26/13), http://www.washingtonpost.com/investigations/inside-the-hidden-world-of-thefts-scams-and-phantom-purchases-at-the-nations-nonprofits/2013/10/26/825a82ca-0c26-11e3-9941-6711ed662e71_story.html
76. Better oversight will prevent fraud. TheChronicle of Philanthropy, (11.18.13), http://philanthropy.com/article/Better-Oversight-by-Nonprofit/143161/?cid=pt&utm_source=pt&utm_medium=en
77. Priest’s spending from trust fund raises questions. Chicago Trib (10/29/13), http://www.chicagotribune.com/news/local/suburbs/glenview/ct-met-greek-orthodox-church-controversy-20131029,0,7936259.story
78. Former Goodwill executive is arrested for money laundering and the theft of millions.  SF Chronicle , http://www.sfgate.com/bayarea/article/Friends-see-saint-cops-see-schemer-Why-2611645.php
79. Conn. Priest is accused of stealing $1.3 million. Huffington Post (7/6/10), http://www.huffingtonpost.com/2010/07/06/kevin-gray-waterbury-prie_n_636342.html
80. During the past 5 years 85% of Catholic dioceses have experienced embezzlement. NYT (1/5/07, http://www.nytimes.com/2007/01/05/us/05church.html?_r=0