What these institutions have in common is that they all report a "'significant diversion' of assets." Accountants and lawyers might recognize what that is immediately, but here is a translation for the rest of us from the Washington Post:
- Columbia University
- Drake University
- Georgetown University
- New York University
- St. John's University
- University of Miami
- University of Pittsburgh
- Vassar College
- Wesleyan University
- Yeshiva University
A Washington Post analysis of filings from 2008 to 2012 found that ... more than 1,000 nonprofit organizations that checked the box indicating that they had discovered a “significant diversion” of assets, disclosing losses attributed to theft, investment fraud, embezzlement and other unauthorized uses of funds. The diversions drained hundreds of millions of dollars from institutions that are underwritten by public donations and government funds. Just 10 of the largest disclosures identified by The Post cited combined losses to nonprofit groups and their affiliates that potentially totaled more than a half-billion dollars.The Post contiunes:
The Post found that nonprofits routinely omitted important details from their public filings, leaving the public to guess what had happened — even though federal disclosure instructions direct nonprofit groups to explain the circumstances. About half the organizations did not disclose the total amount lost.John Koskinen, the man nominated to be the new IRS commissioner, vows to investigate diversion of assets by non-profits. The Washington Post's reports deals mainly with examples of theft and embezzlement but the significant diversion also includes the "use of the organization's assets other than for the organization's authorized purposes."
The findings are striking because organizations are required to report only diversions of more than $250,000 or those identified as having exceeded 5 percent of an organization’s annual gross receipts or total assets. Of those, filing instructions direct nonprofits to disclose “any unauthorized conversion or use of the organization’s assets other than for the organization’s authorized purposes, including but not limited to embezzlement or theft.”
The Post quotes Reverend Raymond Moreland of the Maryland Bible Society, a victim of a diversion of assets:
You go out of your way to trust a nonprofit. People give their money and expect integrity. And when the integrity goes out the window, it just hurts everybody. It hurts the community, it hurts the organization, everything. It’s just tragic.People who donate to a non-profit for a specific purpose expect their money to be used for that purpose. If you donate your money to an organization called Save the Skunks for the purpose of protecting Mephites mephites you might not appreciate the organization using the funds to breed and feed Bubo virginianus, no matter how noble that goal may be.
Because the Post's reporting was simply based on tax forms which often do not provide details about what the significant diversion was, it is hard to say what happened at the universities listed. My guess is that most of them are the unfortunate victims of theft, fraud, or embezzlement.
