FBI Eyeing International Humanities Center Shutdown

May 14, 2012; Source: Los Angeles Times

The Nonprofit Quarterly’s Cohen Report broke the story (see here and here) about the collapse of the International Humanities Center (IHC), a nonprofit fiscal sponsor based in Woodland Hills, Calif. We detailed several hundred thousand dollars of missing funds and efforts of the small, often unincorporated groups sponsored by the IHC to get public sector oversight officials to pursue the missing IHC leaders. We wrote about contacts with the California Attorney General’s office and the desire of some of the aggrieved groups to get the Federal Bureau of Investigation (FBI) involved.

The Los Angeles Times now reports that the FBI is actually involved, along with the state AG’s office, in looking at what happened to the funds of the approximately 200 groups relying on IHC. The Times suggests that the groups may have lost approximately $1 million in the shutdown, and its efforts to reach the founder and executive director of the International Humanities Center, Steve Sugarman, have been no more successful than ours. Sugarman has reportedly not responded to e-mails from the Times and his phone has been disconnected.

The Times confirms our understanding that the hardest hit group was the Pasadena, Calif.-based Afghan Women’s Mission, reporting a loss of $404,000 which was supposed to have supported schools, health facilities, and emergency relief projects. The co-founder of the mission, Sonali Kolhatkar, says that it used to receive about $10,000 a month in donations, but now donations are “at a trickle.” Peaceful Uprising, which addresses global warming issues, lost $88,000 which it had used to pay for four staff people in its Salt Lake City office, but now the office is run by volunteers.

The groups that used IHC ass their fiscal sponsor are struggling with how to present and communicate what happened to them. Does admitting that they might have been scammed out of donors’ contributions harm their pitches for new funding? What does their association IHC, now the focus of FBI and California AG investigations, do to their reputations? With IHC’s executive director unreachable, and with one of IHC’s senior executives having left the country after what has been alleged to have been “a deceptive email scam,” there is plenty here to trigger the interest of the FBI and the AG. But will that result in funding to replace what the sponsored groups have lost?

The groups who used IHC have done nothing that makes them culpable for what might have happened inside the Center to make it collapse so precipitously. The nonprofit sector—and the nonprofit fiscal sponsors sector—should be doing whatever they can to shore up the positions of these organizations that, through no fault of their own, have lost hard-to-get resources. Moreover, given how small and fragile these organizations are, the FBI and AG, neither of which really confirm their investigations, ought to speed up their reviews so that if prosecutions and/or rectifications are warranted, they can be achieved as rapidly as possible.—Rick Cohen