Monday, October 28, 2013

Cheater nation: The scam that is the U.S. nonprofit sector

In the U.S., charity is becoming big business:

More than 1.6 million nonprofit groups are registered with the federal government, and they control more than $4.5 trillion in assets.... From 2000 to 2010, the number of registered nonprofits increased by 24 percent, according to an Urban Institute study. Annual revenue at such organizations, adjusted for inflation, grew by 41 percent.

And just as in Big Business, cheating is rife.

According to a Washington Post analysis, from 2008 to 2012, more than 1,000 nonprofits declared to the IRS that they had "significant diversion" of assets -- theft, fraud, embezzlement, etc.  And those are only the ones that owned up!

Moreover, the IRS is pretty lax about what "diversions" must be disclosed: only amounts more than $250,000 or those identified as having exceeded 5 percent of an organization’s annual gross receipts or total assets. 

We're talking hundreds of millions of dollars being misspent or just plain stolen.

We'd be better off trusting the U.S. Government to do the poverty-alleviation work of many of these nonprofits. With it comes Congressional oversight, stringent public procurement rules, rigorous accounting and Inspector General audits.

By Joe Stephens
October 26, 2013 | Washington Post

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