Thursday, February 7, 2013
In the past few weeks, two individuals plead guilty to embezzling money from nonprofit organizations. One woman, the former treasurer of the Institute Volunteer Fire Department in West Virginia, plead guilty to embezzling $25,000 from the fire department, and an additional $33,000 from the West Virginia State University Alumni Association, for which she also served as treasurer. Similarly, the wife of the former executive director of Charleston’s Multicultural festival plead guilty in U.S. District Court to federal tax fraud after she admitted to embezzling over $300,000 from the organization. Both of these organizations rely heavily on public funding.
The misappropriation of public funds raises significant questions regarding whether nonprofit organizations and charities should be required by law to bond officers who handle public money. Advocates in favor of legally imposed bond requirements argue this sort of law would help the organizations get their money back when funds have been mishandled.
However, in many states, nonprofit organizations and charities are not required by law to bond officers who handle money. Still, some nonprofit organizations are taking a more proactive, preventative approach by including bond requirements in the organization’s bylaws.