The False Claims Act (FCA) is the single-most powerful tool for rooting out fraud against the US government, and any nonprofit that receives federal funds should ensure compliance is integrated into its programs to avoid the severe penalties that can come with FCA violations.
Any entity that is a direct recipient of government funds, or that indirectly receives government funds (e.g., an entity who provides services or products that are reimbursed by government funds), is subject to the FCA. The FCA empowers federal enforcers and certain whistleblowers to seek significant — often multi-million dollar — penalties if the recipient of funds knowingly submits, or causes to be submitted, false claims to the government. The penalties include liability for three times the government’s damages, which could be the entire amount paid to the organization, plus a penalty of $14,308-$28,619 per false claim. As a result of FCA enforcement, the government has reclaimed more than $85 billion since 1986 and exceeded $6.8 billion in FCA settlements and judgments for fiscal year 2025.
This article addresses common questions for nonprofits about the FCA.
Yes, nonprofit organizations that contract with the government or receive federal grants, loans, or other federal funding could be at risk of FCA enforcement actions if they do not carefully document and manage their compliance with their contractual obligations when submitting...
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