In most states, the Attorney General has the authority to govern organizations that administer or solicit charitable funds. While the authority varies by state, most Attorneys General require initial registrations as well as annual updates.
But the Attorney General plays another important role. It acts on complaints about abuses and misuses of charitable assets.
Corrective action often includes monetary fines against directors to make the charity “whole” for losses caused by breaches of their fiduciary duties. They also can be forced to resign.
This scenario recently played out for Central Asia Institute dir
Although no criminal wrongdoing was found, Mortenson will have to repay the organization $1 million. He is also barred from continuing as a voting director, even though he will continue to serve as an employee of the organization.
Mortenson serves as a good example of what not to do. Unfortunately, it appears that he suffered from founder’s syndrome. Directors must monitor and oversee founders who act as executive directors in an effort to protect both the organization and the founder. Directors must also ensure that the charity’s finances are not commingled with those of the founder or anyone else. Meticulous bookkeeping is also a must.