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  1. #1

    Default Embezzlement Discovered at a Nonprofit

    My question involves criminal law for the state of: Ohio

    I am the president of a non-profit.

    I recently discovered that a small ongoing fundraising effort account was short almost $1000.

    The account has always been in cash. I discovered this on May 3 and made a move to have the account turned into the main treasurer so that it could be properly administered.

    When the money was turned into the treasurer is when the shortage was discovered.

    The previous administrator of the account has turned in all paperwork, receipts, etc showing the fund balance as of 11 months ago, when the fund was turned over to the new chairperson. (unfortunately, since these 2 people were friends, they did not see the need to sit down and count the money together and sign off on anything verifying this transfer)

    We have had 4 fundraising events for this account since the changeover of chairperson.

    There are no records for the first event, but we have sales receipts and invoices from the other three.

    We have been piecing together an accounting record using these documents turned over by the current chairperson.

    I had a meeting with the current chairperson in hopes that there was a misunderstanding or accounting error that caused the issue. My questions were not satisfactorily answered and I removed the person from the position of responsibility (volunteer organization).

    I do not know what my next step should be.

    I will be calling our CPA and our insurance agent for advice, but I'm afraid, since we have no official documentation of the fund turnover 11 months ago that I am up a creek as far as being able to prove anything... I can't call a lawyer as we do not have the kind of money required - are there pro bono services available for small non-profits?

    Advice?

  2. #2
    Join Date
    Sep 2005
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    98,846

    Default Re: Embezzlement Discovered at a Nonprofit

    If your organization doesn't keep track of its cash or expenditures, such that you cannot document who might have spent or taken the money or how the money might have been used, you need to improve the way you account for cash. If you're asking how to prove that money was stolen and by whom with no evidence, unless you luck into a confession you can't - you need evidence.

  3. #3

    Default Re: Embezzlement Discovered at a Nonprofit

    Only one person was in charge of the money. She has been claiming for months that it is home in her safe and she will be turning it over to the treasurer. It was her responsibility to keep financial records. When she finally turned it over, the account was very short. There were cash receipt records and expenditure records for three of the events, but they weren't organized, just stuffed in a large envelope. There do not seem to be any missing for the three events, as they are a certain number of days long and there were cash receipt documents for every day of the event, None were missing.

    Yes, we know we need to improve the way we account for this (it was a concessions stand). I am the new president and just discovered this and have been making moves towards proper accounting practices.

  4. #4
    Join Date
    Jul 2010
    Posts
    7,945

    Default Re: Embezzlement Discovered at a Nonprofit

    Why on earth would you allow anyone to hold the organization's funds in their personal residence? It should have been going into a bank account set up for the organization which had safeguards in place to prevent theft.

    You're likely out of luck on pursuing any criminal charges since you can't prove anything.

  5. #5

    Default Re: Embezzlement Discovered at a Nonprofit

    I did not permit this. The person in question was the president at the time and took it upon herself to do it this way and name herself the new committee chair. I am brand new to the board of directors AND the presidency and noticed this irregularity after reviewing some of our committee functions and immediately took steps to change this.

    There is nearly $1000 missing from a fund that should have just over $2000 in it.

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