The Mankato free Press reports that over $175,000 has been taken from various Minnesota non-profit organizations over the past four years. Non-profit organizations have been required to report losses that are experienced because of fraud, theft, or mismanagements of funds if the missing amount exceeds 5 percent of their annual gross receipts or $250,000. Non-profits have to report the total amount of money that has been lost and what caused the loss.
The Washington Post built a searchable database that reveals such losses, bringing to the attention of the public what would otherwise be unknown. Because non-profits are usually reluctant to disclose theft and mismanagement of funds, people could find out the information after a complicated search of annual filings.
Minnesota had a total of 30 organizations who reported losses, also known as “significant diversions.”
There were five non-profits in southern Minnesota that faced over $175K in total losses. This made for the highest amount of non-metro region losses and the area with the most losses closest to the metro area. Rochester was the only exception.
At the same time, the reporting was fraught with errors. Nonprofits have had issues detailing their significant diversions. In southern Minnesota, not one of the reports succeeded in being able to give the full details of the incidents that led to the total losses.
New Ulm alone lost more than $110,000 in 3 years due to just two non-profit theft incidents. This was the only municipality outside of the metro area to have multiple incidents.
The first incident seen in New Ulm was a treasure who stole over $90,000 from the Agricultural Society in Brown County. However, they only reported their losses as being just a little less than $57,000 because their legal action was ongoing, so they reported what they believe they will recoup in the court system. They did receive a $92,190 reward in the court.
The second incident involved a couple who stole nearly $20,000 from the New Ulm Hockey Association after claiming they could organize an event featuring a well-known comedian. The total loss of funds was not reported. The hockey association’s president said that he had not realized that he was required to report those details on the form.
While this is an issue that seems small, it does have a big impact. The amount does reflect just a small amount of money that the nonprofits deal with annually, but even the small thefts can have a huge impact on the individual organizations.
The executive director with the Minnesota Council of Nonprofits said that every incident breaches trust. The organizations rely on the public a great deal and they need the public to believe that their money is being watched over and used the way it is supposed to be used.
All thefts have been reported to the nonprofit’s board, but each organization has a responsibility to decide if they want to disclose those losses to the public. The opinion is that tending toward disclosure is the best way to protect the public trust, thus also providing other organizations with a warning to be aware.