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Is nonprofit treasurer accountable for grant?

Your Legal Questions Answered

Is nonprofit treasurer accountable for grant?

I am the treasurer of a nonprofit foundation designed to help two museums, one owned by an historical society and one owned by the local county. Recently our foundation made a $75,000 grant to the historical society. The application was originally approved by the historical society for $35,000 but was brought to the Foundation as a request for $75,000 to buy a building from the County. The grant was approved by the foundation and only afterwards by the society board. I am also vice president of the society and voted for the original application and against the $75,000 grant from the foundation.

The building was immediately deeded from the historical society to another charitable nonprofit. Three officers of this nonprofit are also officers of the foundation. Because I did not support the $75,000 grant, I no longer receive financial information from the foundation’s investment account. What is my responsibility as treasurer? If what they did was illegal, am I accountable?  

If you voted against the original grant from the foundation and your opposition is recorded in the minutes, you should have no responsibility for the grant even if it was illegal.  You do have responsibility for the financial statements of the foundation as long as you are treasurer and their attempt to keep information from you is both petty and improper.  You have a right to, and the need for, the information to fulfill your fiduciary duty.

Since the society’s board has essentially ratified the application for $75,000, it seems that the grant was not improper.  I assume that the historical society’s board made a conscious decision to approve the subsequent transfer of the property to the other organization.  If you voted against the transfer from the historical society, you would have no accountability for this transaction either. Even if you didn’t vote no, since all of the transactions are between different charities, it is not clear that the transfer would be illegal, even if the board of the society didn’t know who was on the board of the recipient. 

You may decide you don’t like working with this group, but it doesn’t look like you are accountable for anything other than the financial statements of the foundation.

Tuesday, September 28, 2021

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