Charities Victimized by Theft Often Eschew Criminal Cases

Nonprofit groups hit by internal fraud or theft—but looking to avoid bad publicity or a donor backlash—frequently decline to pursue legal action against suspected embezzlers in exchange for repayment of the lost funds, according to The Washington Post.

The article—a follow-up to the Post’s investigation of nonprofits’ limited disclosure of “significant diversions” of their assets—notes examples of groups seeking restitution only in six-figure theft cases and the reasons for their reticence to call in authorities. Law-enforcement officials said failure to pursue criminal sanctions leaves suspected embezzlers free to go to work for other organizations.

Many victimized groups “shy away from prosecuting, because they don’t want the publicity and they don’t want donors to shy away from them,” said Jack B. Siegel, a lawyer and charity consultant in Chicago. “It’s in no one’s interest at the charity to make it public.”

Read a Chronicle of Philanthropy opinion column on the Post report and charities’ financial oversight.