Who is responsible for fraud in a Non Profit Organization?

If a donation is made to a non-profit organization and it is giving to the chairman...?

• If a donation is made to a non-profit organization and the person donating the items give it directly to the chairman but the chairman does not notify the boardmembers of the donation and he dispurses the donations to people he believes deserve it. Can he be guilty of embezzlement or fraud? The donations totalled to about $1 million in items. According, to the non-profit, the proper procedure is that any donations are to be brought forth to the board members and documented as being received and then they decide how it is to be dispursed. It's been months and they haven't done anything to the chairman. But also, the boardmembers work at the chairman's business so they maybe afraid to try and press charges if it is possible. So did the chairman break any laws? Can he be charged with fraud or anything?

• Answer:

  If the items were valued at more than $250, then the nonprofit has to provide a receipt to the donor, at least in America. It also has to be reported on Form 990 to the Internal Revenue Service. If the recipients are related in any way to the board chairman or any board member, then that has to be reported to the IRS as well. Also, in America, relationships between board members need to be disclosed to the IRS and listed publicly in the 990. You can see how this is done at www.guidestar.org by looking at a Form 990. If he's accepting items and not following internal procedures, then you can argue that this is fraud, especially if donors were told otherwise. I would report it to the police and the local district attorney. If nothing is done, then I would report it to your local newspaper.