‘Diversions’ From Nonprofits Prompt Capitol Hill Scrutiny

Congressional leaders and regulators in several states have launched investigations into whether charities have properly reported to authorities “significant diversions” of assets due to financial wrongdoing, The Washington Post writes.

The multiple inquiries follow a Post report last week that nonprofits have quietly lost hundreds of millions of dollars in recent years due to theft, fraud, and other unauthorized uses of their assets. Authorities in seven states and the District of Columbia say they are using a database of Internal Revenue Service filings compiled by the newspaper to examine how well groups are safeguarding their money.

Senator Charles Grassley, the ranking Republican on the Senate Judiciary Committee and Capitol Hill’s most vocal watchdog on nonprofit finances, said he has launched two separate probes related to the diversions, one on an alleged $3.4-million embezzlement from the American Legacy Foundation, a Washington group. Republican Sens. Tom Coburn and Orrin Hatch also called for investigations on the issue.

Read a Chronicle of Philanthropy opinion column about The Washington Post’s report on nonprofit asset diversions.