M E M O R A N D U M
To: Reporters and Editors
Re: Diversion of funds from non-profits
Da: Friday, Nov. 1, 2013
Sen. Chuck Grassley of Iowa, a long-time watchdog of tax-exempt organization practices and IRS enforcement of tax-exempt laws, today made the following comment on the diversion of funds from tax-exempt groups as reported by The Washington Post. Grassley also wrote to the American Legacy Foundation, an organization featured in the Post’s coverage, with a series of questions about the reported diversion of $3.4 million from the group and governance and fund-raising practices. The letter is available here.
“The Washington Post provided an invaluable public service in doing what no one else did. That’s making already public information more useful to law enforcement and non-profit donors. When I urged the IRS to seek more transparency from non-profits, this is exactly what I had in mind. The public should know when charitable dollars are diverted. Tax-exempt dollars are meant for tax-exempt purposes, not bankrolling someone’s personal Champagne lifestyle. Without this kind of disclosure, law enforcement and charitable donors might never learn of diversion. And let’s call ‘diversion’ what it is a lot of the time – old-fashioned stealing.
“I’m looking into ways to make sure law enforcement is regularly connected to getting diversion data. These cases should be investigated and prosecuted when appropriate. The American Legacy Foundation lost $3.4 million, and it’s unclear whether anyone was held accountable for it. It’s also stunning that diversion appears to be so common. That should be a wake-up call to the IRS, law enforcement, and every tax-exempt organization. Thieves famously go where the money is, and charities have to protect their donors.”