Here are a few of them - Vassar College, in 2011, discovered that a former employee submitted $2.5 million in fraudulent construction invoices. Also noted was The Boy Scouts of America and how they too experienced a loss, of $350,266, after an employee fraudulently processed credit card payments.
The tax law requires an organization to disclose a diversion of assets if the amount exceeds $250,000. However, there is another requirement for disclosure and that if the diversion exceeds 5% of receipts. For example, if an organization has annual receipts of $500,000 (the volume of many Vermont nonprofits) the theft reporting threshold would be $25,000 along with an explanation as to what had transpired.
The American Cancer Society suffered a loss in the reporting period of $1,517,057 through a telecommunication scam. Also, an "elaborate scheme" had been perpetrated on the Shriners Hospitals for Children, when $800,000 was stolen from the St. Louis Shriners Hospital.
A number of the sampled 1,000 organizations represent some of America's best known hospitals, universities, museums, research centers and labor unions.
The president of a teamsters local, affiliated with the International Brotherhood of Teamsters was terminated after it was discovered that he embezzled $252,000 from the local. It was reported in the article that many embezzlers had been long time employees of the organizations they had stolen from. The controller, for 17 years, at the Oneida Golf and Country Club stole in excess of $2.6 million. The Brooklyn Institute of Arts and Sciences long time payroll manager is a case where trust was misplaced. This individual took $650,000 from the New York City nonprofit.
It should be noted that the time period reported by the Washington Post, 2008 to 2012, was when the infamous Bernie Madoff was in play. Many of the organizations whose Form 990 were examined disclosed how they were scammed out tens of millions of dollars after having transferred their funds to Madoff's firm.
One would think that the embezzler would look at the mission of his or her employer and not strike and divert the much needed funds? The embezzler's attitude is - mission be dammed. And this was the case with the following two organizations - The United Way of Central Maryland, Inc., and the Girl Scout Council of Greater New York. Sadly, both had experienced losses, of $382,447 and $311,584.
It has to be a gut wrenching decision for those nonprofit boards who have to answer yes to question No. 5? No board member wishes to have to inform the world that donated funds had been absconded during their watch. It casts a negative perception about the management and over-sight by those in charge.
Closer to home, we have 8,000 nonprofits on file with the Vermont Secretary of State's office. The question becomes do any of them agonize over how they have to answer question No. 5? I would guess that they certainly do. And why - because in Vermont we trust everyone and have so few resources to pay for the controls required to avoid a diversion of funds. And that is not to say that controls alone would have prevented the loss in the Post's 1,000.
The size of these nonprofits suggests that controls were in place but unfortunately, circumvented.
The Washington Post piece noted what Cheryl Heaton, the chief executive of American Legacy Foundation stated after realizing her organization had been embezzled - "We're not innocent in this. We are horrified it happened on our watch - the truth hurts - we screwed up."
The Washington D.C. based, 14 year-old nonprofit, found that a senior executive had diverted $3,391,648 from the organization. The organization's board of trustees included such national figures as --Janet Napolitano, Homeland Security, Jay Nixon, Gov. of Missouri, Gary R. Herbert, Gov. of Utah and Idaho's Attorney General Lawrence Wasden.
And it is not over for Legacy - the November 21, 2013 issue of the Chronicle of Philanthropy reports that U.S. Senator, Charles Grassley (R-Iowa) has opened up an inquiry as to what took place at the nonprofit.
What is disturbing to me is if such huge sums, hundreds of millions of dollars, can be stolen from sizeable national nonprofits what chance do we have in Vermont, that diversion of assets from nonprofits doesn't happen here?
Don Keelan writes a bi-weekly column and lives in Arlington