Nonprofit fraud is in the news a lot these days.
Federal investigators in Minnesota prosecuted one of the largest alleged COVID-19 pandemic fraud schemes, in which several nonprofits and individuals are accused of stealing about US$250 million from a federally funded child nutrition program.
The defendants were found guilty in 2025, three years after the investigation began, of diverting funds by faking meal counts and submitting false reimbursement claims, then spending the money they got on luxury homes and cars. Other federal investigations of alleged fraud at nonprofits serving children in Minnesota are underway.
In April 2026, the Department of Justice under the Trump administration indicted the Southern Poverty Law Center, a civil rights nonprofit, on fraud charges that the center denies. That indictment has raised concerns about increased federal involvement in policing nonprofits – especially those that take actions the government may find objectionable.
The Department of Justice says it reached more than $6.8 billion in settlements and judgments in 2025 tied to the False Claims Act, the highest on record.
The False Claims Act, enacted in 1863, allows the government to pursue individuals or organizations who intentionally submit a “false claim” – baseless requests for taxpayer funds through a government grant or as reimbursement for services provided through a contract.
The Internal Revenue Service defines nonprofit fraud as the misuse of an...
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