Here are three more articles discussing the cease-and-desist orders issued by the California Attorney General against three large charities who have large amounts of donated medicine. Previous post discusses a few earlier articles.
Update: Food for the Poor has provided a response to the Boston Globe article, which you may read here.
5/30/18 – editorial in Sun Sentinel – Food for the Poor controversy reveals need for nonprofit transparency – Editorial highlights that using US pricing compared to international pricing increases apparent efficiency. The challenge, visible in the article, is that the charity claims 95% of all expenses are for program and the article says the California AG claims 66.7% of cash donations are used for program.
In a statement which should sober every accountant, CPA, auditor of NPOs, and staff of R&D charities, the editorial asks:
(S)uch accounting practices may be legal, and they may be the industry standard, but are they honest?
Let me paraphrase two questions embedded in that comment (yeah, CPAs actually talk that way – we look for embedded derivatives and embedded leases). The editorial is asking:
- Is the industry standard consistent with GAAP?
- Is either GAAP or the industry standard honest?