January 6, 2005 | Read Time: 1 minute
New York State officials have ordered officers and directors of three dozen charities to repay a total of $1.3-million in loans they had received from the organizations.
The New York attorney general’s office said most of the money has been repaid.
The state office ordered the repayments as part of an investigation spurred by a Chronicle study that uncovered more than 1,000 charities across the country that had outstanding debts from loans to officers and directors totaling $142-million.
The results of the study appeared in the February 5 issue of The Chronicle.
Legal Requirements
New York law prohibits loans to officers and directors of nonprofit organizations, except those chartered as educational institutions by the state Board of Regents.
Paul Larrabee, a spokesman for the New York attorney general’s office, said that accountants in the New York State Charities Bureau have been examining 165 nonprofit groups in New York that appeared on The Chronicle’s list of organizations that had made loans to their officers or directors.
Because many charities do not understand the state’s law on loans, the New York attorney general’s office will work to teach charities about the statute in symposia and other meetings with nonprofit organizations, according to Mr. Larrabee.
“This particular section of law is going to become one that is more prominently discussed and advised,” he said. “Organizations were just not as aware of the requirements as they should have been.”
