Save Your Co-Mingling for Happy Hour

June 26, 2013 Posted by Jessica Shofler in Accountability, Donations, News

Thanks to Big Brothers Big Sisters, we have a great example of how not to spend government money. A government audit  recently concluded that the organization can’t properly account for any of the $19.4 million of Justice Department funding it received.

These tax dollars were provided to the organization as restricted funds, in other words, funds that are restricted by a donor for a designated purpose and that must be used for that purpose alone. Specifically, the Justice Department required that the funds be used for mentoring tribal youth, military children, and at-risk youth. Instead, Big Brothers Big Sisters was found to be co-mingling these restricted funds with its general operating funds.

That’s not all. The Inspector General also determined that Big Brothers Big Sisters failed to properly oversee tax dollars it gave its affiliates, document its spending, monitor consultants, and report income.

In response to these findings, the Justice Department has frozen all funding to the organization. T. Charles Pierson, Big Brothers Big Sisters’ President, contends there is no funny business here and that the organization’s accounting procedures just need to be fixed. The organization has already hired a new CFO and started beefing up its internal controls, grant management systems, and training.

If your organization receives government funding, don’t wait until the funding is frozen to implement these types of changes. Burying your head in the sand never helped anyone.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits,1812 W Burbank Blvd, #7445, Burbank, CA 91506

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