And I have found none so I will pose my question here

Last week I was confonted by a situation which first left me with a feeling of betrayal and then of anger

I am leader of a non profit organisation who recently engaged in a fund raising. I became aware that an amount of $100,000 was "parked" in an account recently opened in a trading organisation in our name on behalf of another industry organisation. Questions of an officer who had custody of the account elicited vague responses and on Friday I received a mia maxima culpa from the CEO of the other organisation leaving me in in difficult position. Is the officer guility of an offense requiring displicanary action? Is the transaction some form of money laundring or a tax evasion scheme? We are a deductable gift recipricant and the deposit is in our name. Certainly something has happened but what? To Cap this off my organisation has been offered benefits that may or may not have otherwise been received, further evidence of something? But what as these benefits are not cash?

Since you are the leader then you must be able to get your questions fully answered or you can not accept the donation. Im sure as is the case here there are strict rules and for your orginization you need to protect it from within. If you have questions then get answers until you are satisfied that everything is on the up and up.

As leader you must follow the trail and allow heads to roll if the rules werent followed and your orginization was put at risk.

I have to agree here as your responsibility as a leader is to get the facts and take appropriate actions on behalf of your organization.

Therein lies the problem, I have all the explanation from that CEO I'm likely to get, basically he is saying he did it without the knowledge of our officer, but the vagueness of the answers from our officer don't offer clarity and the deposit would not be able to be moved without his complicity. I cannot identify the risks we might have been exposed to because I don't understand how the transaction could have been made with a third party pulling the strings and the circumstances which allowed it to exist so I don't know what actions are needed to protect our organisation. There is no suggestion we should keep the deposit

From what your saying atleast here in writing. Your not truely satisfied with what your hearing. If your not satisfied then persue it further until you are. It is your responsibility to tie it all together. If the parties do not wish to co operate then you will have to take action. Being the leader this is the sucky part of the job.

You bet I'm not satisfied with what I'm hearing, as a professional businessman, a CPA, I'm appalled by what I hear already

Trade organization 'benefits' sounds suspiciously like what I was reading about Wounded Warrior Project, an American non-profit that is raking in the donations but not showing that they are helping very many veterans. There are stories about warehouses full of mostly useless products being handed out. I would investigate the notion of unloading unwanted merchandise to charities and taking a deduction.

I'm guessing wildly here, because I don't know where a real money deposit plays into this, if there really is such a deposit. You say 'in an account' at the trade org, so not a bank... so easily funny munny, not real. They want to see if you will take the bait about 100K, and if you do, then they will proceed with their quasi legal scam.

"Known in the world of charity as "product philanthropy," the growing practice stems in part from an obscure 1976 tax provision by Congress that allows big companies to take up to twice the tax deduction they normally receive if they donate goods to charity instead of discarding them. Under a complex formula, companies can deduct up to double their "cost basis" -- generally, their manufacturing cost -- provided the products go to a nonprofit organization "solely for the care of the ill, the needy" or minor children. Normally, companies that discard unsold items can only expense their cost basis." --Wall Street Journal, 2005

Trade organization 'benefits' sounds suspiciously like what I was reading about Wounded Warrior Project, an American non-profit that is raking in the donations but not showing that they are helping very many veterans. There are stories about warehouses full of mostly useless products being handed out. I would investigate the notion of unloading unwanted merchandise to charities and taking a deduction.

I'm guessing wildly here, because I don't know where a real money deposit plays into this, if there really is such a deposit. You say 'in an account' at the trade org, so not a bank... so easily funny munny, not real. They want to see if you will take the bait about 100K, and if you do, then they will proceed with their quasi legal scam.

"Known in the world of charity as "product philanthropy," the growing practice stems in part from an obscure 1976 tax provision by Congress that allows big companies to take up to twice the tax deduction they normally receive if they donate goods to charity instead of discarding them. Under a complex formula, companies can deduct up to double their "cost basis" -- generally, their manufacturing cost -- provided the products go to a nonprofit organization "solely for the care of the ill, the needy" or minor children. Normally, companies that discard unsold items can only expense their cost basis." --Wall Street Journal, 2005

I have avoided naming the organisations but we are talking about funny money something akin to barter dollars so what is donated is points they have accumulated which I suspect enables them to turn them into a tax deduction and offset liabilities. Perhaps you are right it might be bait but I don't yet see how the intermediatary organisation gets to benefit as these credits can't be cashed out. The trade organisation operates like a bank

No clue, unless it's to obscure the paper trail. Or the other entity is a B-Corp. Aren't you in AU though?

Yes, don't know what you mean by a B-corp. The trading organisation purports to be an international company and appears to have established structure, The intermediatary is an industry association, The donor or donors? We are a non profit who participated in a fundraising sponsored by the industry association, There were no issues with that. The industry association arranged that donated funds would be matched by these donors, but available credits appear to have gone far beyond that, as you said "bait". Also the names of the donors appear to change from what is initially stated

Hello clete:

How are you the leader and you don't have check writing authority? HOW did this guy GET the money in order for him to put it where HE wanted??? Why don't you threaten him with REMOVAL and/or a police investigation??? If there's hanky panky, and you DON'T report it, you COULD be linked to it.

In the final analysis, it looks like you need a re-write of the charter..

excon

It's complex ex and yes I do have that authority but in this case I deligated it because I didn't expect the transactions to be large and in any case of small value and very infrequent. The account is is like a corporate credit card account. His response is that he had nothing to do with the transaction, that it was done without his knowledge. Matters have progressed and further transactions have been made removing that part of the balance that does not belong to us but again allegedly done without his authority.

I have been in contact with a third party who has taken full responsibility but the whole thing is inexplicable and has corporate governance implications

If you are unhappy with it, stop it. Require the money to be removed from that account, and take control of what is happening.

One must first get control of the account, not an easy task it appears

Clete - does your organization do an annual financial audit? One of the purposes of an audit is to review policies and practices with an eye towards minimizing risk of fraud. If I were you I would call my auditors and ask them to help you understand the transactions that have occurred.

The matter will beplaced in the hands of our auditors when they do their audit. My concern is that the outcome will result in a qualified audit report without any further clarity

Part of the audit includes a management review, which you as leader of the non-profit should participate in. That's the perfect time to bring this issue up. Or as I noted previously - don't wait for the annual audit but instead call the auditing firm today and ask them to check it out. I'm involved with a rather large non-profit here in the US, and over the years our Executive Director and Finance Director have on several occasions used the services of our auditors between audits to help untangle some particulary sticky transactions.

If I were in your shoes, not only would I be proactive, but very aggressive in getting the facts and have a plan that insured a timely outcome.

We will deal with it tomorrow evening

I become more amazed every day, "the dog ate my homework excuse" was accepted, The additional benefits accepted, and risks ignored. It seems I must be wrong to question motive and opportunity when a plausable excuse exists such as it was mentioned in passing and I was too busy to pay attention or tell anyone but I didn't have anything to do with it. I am also told that the "donor" may be a principal in the trading company, which maybe provides some answers

to quote some memorable movie lines, "I'm too old for this sh#t