Republican Sen. Charles E. Grassley (Iowa), ranking member of the Judiciary Committee, opened an investigation into legal issues related to the diversions. He launched a second probe into an alleged $3.4 million embezzlement at the Washington-based American Legacy Foundation.
“The public should know when charitable dollars are diverted,” Grassley said in a statement. “Tax-exempt dollars are meant for tax-exempt purposes, not bankrolling someone’s personal Champagne lifestyle.”
Sen. Tom Coburn (R-Okla.), ranking member of the Homeland Security and Governmental Affairs Committee, said he will ask the Government Accountability Office to look into many of the same issues.
On the other side of the Capitol, Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, issued a statement calling it “vital that nonprofits account for, and accurately report, how their funds are used, even when the worst happens and funds are misused.”
Charity regulators from Maryland to Hawaii said that a database of diversions, developed and made public this week by The Washington Post, gave them an additional weapon in their fight to identify wayward nonprofits and focus their limited investigative resources.
D.C. Attorney General Irvin B. Nathan said the database provides “a valuable tool for screening whether nonprofits are fulfilling their basic obligation to protect the charitable assets entrusted to them.”
In New York, the state attorney general’s office is “reviewing the database and will be following up with a number of the charities listed,” said David E. Nachman, the office’s chief of enforcement for charities.
In Hawaii, regulators said they had contacted one charity named in the database that appeared to have failed to disclose the amounts and circumstances of its loss.
“You’ve basically given us all homework,” said Hugh R. Jones, Hawaii’s supervising deputy attorney general for the charities division.
The officials were responding to an investigation, published Sunday, in which The Post identified more than 1,000 larger nonprofits that in recent years disclosed that they had suffered significant diversions of their assets — many acts of fraud and embezzlement.
The diversions highlighted in the article totaled hundreds of millions of dollars. But the investigation also found that in apparent violation of federal reporting rules, many of the organizations failed to include the amount they lost and other key details in their disclosures.