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Nonprofit Law/New Exec Dir trying not to hurt the company


I am a new executive director of a non profit organization that has a bad case of founder's syndrome. While working to respectfully transition the founder out of leadership and myself in, I am uncovering some suspicious fiscal and governance practices. I have recently commissioned we have our first audit done for the organization. If fraud or something else illegal gets uncovered through the audit, what steps should I take to make sure the organization doesn't get destroyed in the process?

Well, generally, organizations would want to keep the facts of the fraud or other illegal activities from the public, especially potential donors, even though the new management has taken over (you have taken over).  That is not a legal issue, though, and I only answer questions relating to the law.  As to the law, I would suggest that you first negotiate with the founder to see if you can arrange restitution. Make sure that you do not tie him not giving restitution to a threat to file a criminal complaint as that is generally consider extortion under state's laws. This is all hypothetical now as you have not yet found anything illegal.  If you do, then you can send me a follow-up with some of the specifics and I would then reply further.

Harvey Mechanic
Attorney at Law

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.

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Harvey Mechanic


I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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