In rare instances following an investigation of a nonprofit, my office has decided it’s best for the target nonprofit to shut down. We then usually create an agreement with that nonprofit for it to dissolve its existence. This generally happens when the legal violations or futility of trying to continue are so stunningly obvious, it’s in everyone’s interest just to stop.

But once I had a nonprofit make an unsolicited offer to dissolve. I was surprised, since my office was still in the initial stages of review, but I agreed. The nonprofit’s conduct had been questionable, but I was not sure any state laws had been broken.

So what could a nonprofit do that was so bad that it voluntarily invoked one of the harsher penalties under Missouri law, even though it may not have broken any state laws? Simple: It completely failed to meet its constituents’ expectations for openness, and the…

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One of an attorney general’s main responsibilities is to step in when a nonprofit’s leadership fails.

We do whatever is needed to preserve the organization’s ability to serve its community.  At times, we need to act aggressively to make sure an organization that is vital to its community continues to fulfill its mission. This happens more often than most nonprofit directors and executives probably realize.

What it often boils down to is this: Sometimes we need to clean house. My favorite example of what can happen involves a case I pursued awhile back against an animal shelter in Missouri.

This shelter was quite important to its community. It was the only shelter in town and one of only three in the four-county area it served. It also had a stunningly beautiful donated campus whose size was measured in acres. But a few years ago, it dissolved into chaos.

We first got…

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A few months ago, I made an offer to the founder and executive director of a nonprofit: Shut the nonprofit now or my office will seek serious financial penalties from you.

The nonprofit executive had worked for three years to build his organization and donated a significant chunk of his life savings to it. His wife had volunteered for it, as had several friends. His goal was to help domestic-abuse victims, and he thought his approach was different—and better—than others. He had great plans, such as building a ranch for kids harmed by domestic violence, running a 24-hour crisis hotline, and creating a fund to provide financial assistance to victims. He set up the organization, got tax-exempt status, and then proceeded to solicit donations.

So why did the attorney general’s office take such a harsh action and force the organization to close?

In short, his solicitations for…

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What should you do when a trusted employee takes the equivalent of 15 percent of your organization’s annual budget?

Embezzlement and other fraud are a huge drain on nonprofits’ ability to serve their communities. Yet I consistently see nonprofits doing less than the law requires them to do to punish thieves, and far less than the most they could do to recover the lost assets.

Over the past few years, my colleagues and I have consistently told numerous nonprofits they need to do more to penalize embezzlers. Executives and board members in charge of nonprofits have a fiduciary duty to protect their nonprofits’ assets and preserve their ability to provide services. If nonprofit leaders don’t do enough, they have breached their duty, and that could prompt their attorney general to take action.

Embezzlement happens. Before my presentations to nonprofit groups, I …

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I work for the Missouri attorney general’s office, and for years I have coordinated its regulation of nonprofits. One day I was explaining to a group of nonprofit experts what regulators like me do, and I rattled off a list of cases from Missouri and from my neighbors in Arkansas, Illinois, Iowa, and elsewhere. When finished, they couldn’t believe the number —and those were just ones I knew off the top of the head.

At that moment, it occurred to me that most people running nonprofits don’t understand how active their attorneys general are, or even what those officials are supposed to do. Yet we have the power to dissolve whole organizations, require them to act in certain ways, remove their directors, and take numerous other actions.

A few high-profile cases handled by attorneys general do make the news, such as the state of Tennessee’s negotiations with Fisk…

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