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Attorney General Settles Claims Of Nonprofit Mismanagement

CONTACT: Todd Daloz, Assistant Attorney General, (802) 828-4605

July 2, 2014

After a months-long investigation into allegations of poor financial practices and misappropriation of funds, the Attorney General’s Office has reached a settlement agreement with a central Vermont nonprofit organization. The Office had received complaints that Food Works’ Two Rivers Center for Sustainability, located in Montpelier, had used funds donated for specific programs for general expenses and other purposes, contrary to the intent of the funder, and had overstated its fundraising success when seeking further donations.

“Nonprofit organizations, like Food Works, play a vital role in our community,” said Attorney General William H. Sorrell, “but when an organization takes funds for a specific purpose and then spends them on something else; it is violating the public’s trust.” As a result of the investigation and discussion with the Attorney General’s Office, Food Works reviewed its fiscal operations and accounting practices, implemented improved financial practices, and increased oversight of its finances by its Board of Directors. The Board subsequently determined that the organization was no longer financially viable and is taking steps to transfer its programs and assets to other nonprofits as it winds down its operations.

Although the Attorney General found that Food Works had engaged in numerous, improper practices from 2001 on, the investigation did not uncover any credible evidence of theft, embezzlement or unlawful gain on the part of any of Food Works’ current or former directors, officers, or employees. The Attorney General was able to settle with Food Works because of its cooperation with the investigation and its recognition of the steps necessary to provide proper financial oversight.

The Attorney General is responsible for overseeing and regulating charitable trusts and charitable organizations operating in the State of Vermont. As part of an effort to ensure that they are entitled to their nonprofit status, the Attorney General’s Office is enhancing its oversight of nonprofit organizations. “The financial health of a nonprofit and adherence to its charitable mission are fundamentally the responsibility of its Board of Directors,” Attorney General Sorrell said. The Attorney General recommends that nonprofit board members review the terms of the settlement with Food Works for guidance on appropriate fiscal management of donated funds.

  Website consulting provided by The National Association of Attorneys General.