Nonprofit “Clawbacks” Limited

Charitable donation clawbacks are an issue at the intersection of nonprofit law, criminal law, and bankruptcy that I was completely unaware of.  Apologies to those who have written on the topic.

Apparently, it happens quite commonly that charitable organizations receive donations that, unbeknownst to them, are the product of fraudulent or otherwise ill-gotten gains.  When the miscreant donors are caught and placed in bankruptcy or another form of receivership, the trustees try to recover the funds from the charity in order to satisfy others creditors’ claims.  in some instances, charities must disgorge funds that were donated many years earlier.

The Minneapolis StarTribune reportsthat Minnesota recently passed a law that would limit such clawbacks to donations made within the previous two years.

TAK