Tastemaker

From NBC News: When the U.S. government's version of the United Way handed out hundreds of millions of dollars to charities last year, its largesse extended to more than 1,280 nonprofit organizations that collectively owe $36 million in taxes dating back as far as 1988.

At the same time, other federal agencies gave $1.6 billion in grants to at least 170 of the delinquent charities, which account for nearly 6 percent of the approximately 22,700 charities funded by the Combined Federal Campaign.

And every one of 15 charities that underwent a detailed audit by investigators at the Government Accountability Office was found to be engaged in “abusive and potentially criminal activity,” according to a report on the investigation.
The GAO referred the charities to the Internal Revenue Service, for criminal investigation and collection.

Among them was a mental health clinic that owed more than $1.5 million and has a track record of failure to remit payroll taxes stretching back for 15 years. The director of the clinic, the report said, diverted the tax money to pay his own salary and that of some employees.

Meanwhile, a drug and alcohol rehab center that owed more than $70,000 in taxes managed to find money to buy a boat for its executive director's use.

“Rather than fulfill their role as trustees … the directors and senior officers diverted the money for charity-related expenses, including their own salaries, some of which were in excess of $100,000,” according to the GAO report, which drew little notice when it was released in July.


The people responsible for vetting the CFC charities and managing the money that federal employees contribute every year have been scrambling to reform the system since the congressionally ordered investigation uncovered the delinquent tax problems. But the effort has run into roadblocks, including a law that prohibits managers of the CFC fund from even checking whether charities that get its money might be committing tax fraud.