If funds are stolen from a 501(c)(3) charity, does the Board have an obligation to report it to the police if the funds are returned?
Generally, citizens have no duty to report the commission of a crime to law enforcement authorities. Whether you want to press charges will probably depend on many factors, including the amount involved, the history of the culprit, insurance requirements, and the circumstances that caused the theft. Boards reach different conclusions in different situations.
We recently heard of one national organization with local fundraising chapters that had a policy of prosecuting in any case of theft. It felt that the deterrence from the message sent to employees saved it a lot of money in the long run and gave donors a sense that it wanted to protect their contributions. Prosecutors will tell you that in many cases when they find someone who has stolen from a nonprofit, the person had done it before at some other organization and had been dismissed without prosecution.
If you are required to file the new Form 990, and if the diversion exceeds the lesser of $250,000 or 5% of the assets of the organization at the end of the year, you will be required to report it on the Form with an explanation of what happened. At that point, if you haven’t reported it to authorities, your donors may begin to ask why not.
With pressure mounting on nonprofits to consider affiliations with other organizations, this workshop is designed to help you better navigate the world of mergers, acquisitions and affiliations. Unlike the corporate world, there are no financial "matchmakers" to help nonprofits identify successful partners for a merger. Learn more in our pre-recorded webinar.
Weekly question and answer
Notice of each full edition
and its free stories
Report on 501(c)(3) electioneering
What our readers say about Nonprofit Issues
Once again you've tackled a tricky question and explained it so we all can understand the issue.--M.V.
Thank you for your informative and keen advice on nonprofit matters. I believe it's a unique and concise place to get answers to this often wispy area called nonprofit. --R.T.
Have a question?
Other ways to
Talk to the Editor
Next Conference Call:
Wednesday, September 10, 2014
Participate in this bi-monthly telephone seminar conference call and ask your questions directly to Editor Don Kramer.
Access the entire site
($9.95/24 hours, $17.95/3 months).
Full Day Program
A well-received full-day program that covers the current hottest topics in nonprofit law. Qualifies in Pennsylvania for Continuing Education credits.
Don is available for programs and speaking engagements ranging from a one-hour presentation to a full-day primer on nonprofit law. Contact us if you are interested in having him speak at your program.