Is the Non-Profit World Teeming With Fraud?

When we recently wrote a column suggesting that philanthropies be run more like businesses, one factor we didn’t look into — but perhaps should have — was fraud.

According to a Times report by Stephanie Strom, fraud and embezzlement in the non-profit sector account for a loss of $40 billion a year, or roughly 13 percent of philanthropic giving.

The article is based on a report (gated) recently published in the Nonprofit and Voluntary Sector Quarterly. Strom’s article peaked at about No. 6 on While Strom’s article hasn’t hit the Times’s “most e-mailed list“; I am guessing that just about everyone in the non-profit world has read it by now, and are readying their replies to anxious donors.

Thirteen percent gone to fraud! That’s about the same loss experienced by the Bagel Man — and he didn’t even have anyone watching the till.

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  1. Roman says:

    Black Swans in Churches: Tails and Biases in Religious Giving.

    Shestakov, Roman (2010) “Black Swans in Churches: Tails and Biases in Religious Giving.,” Journal of Religion and Business Ethics: Vol. 2: Iss. 1, Article 3.
    Available at: http://via.library.depaul.edu/jrbe/vol2/iss1/3

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  2. kazi hossain says:

    We are looking for sum fund for technical education for development poor and low education or educated person for Learn for earn program

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  3. Sandy Frost says:

    Here’s one for you.
    Prostitution facilitated by nonprofits at tax payer expense.
    Google “Sandy Frost” and “Royal Order of Jesters.”

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  4. Appalled says:

    Unreal. I have spent the last four years looking for pro bono and/or legal aid help. There are tons of websites that lead to nowhere- and you can look up their 990 tax forms and see they get millions and grant money. And not one of them provides any meaningful amount of pro bono services. They tell you that they provide very limited help and the tell you about the services you can actually purchase from them. One of the them is the Legal Aid Society in Norristown, Pennsylvania at lasp.org They get 5 million a year-95% from government grants- and their tax return is very suspicious. Go to http://www.grantspace.org/Tools and in the right hand column is a widget to look up any “nonprofit” in the country. Judicialwatch.org is another one run by attorneys down in Washington- none of these organizations do anything but generate jobs for the people who run them.

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  5. Deborah says:

    There are many problems with non-profits that need to be investigated. Inflated documentation robs tax money from state & federal governments. There is no law specifying what part of their income has to go to the reason they were given the status. Some of what people think are clothes or some other staple needed for the poor are actually hiding drugs. They could also include weapons and/or ammunition. I say we turn all the accountants in the USA into deputies and have them investigate all non-profits. If World Vision can run their empire on 10% of their income then so should all non-profits.

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  6. Amy Jensen says:

    It is sad to see articles like this. There are so many good Non-Profit organizations out there; it is a shame to hear about those who are dishonest. There are so many people who need help, especially in Africa. It is important to really research an organization before donating. Find out what inspires them and where the money goes. http://sahbu.org

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