August, 2011; Source: Charity Rating Guide & Watchdog Report (American Institute of Philanthropy) | NPQ has covered the scandal about Greg Mortenson’s Central Asia Institute almost from the outset ( here and here and here), but way ahead of us and ahead of the “60 Minutes” expose was Daniel Borochoff of the American Institute of Philanthropy. Many people classify AIP with other charity raters such as Charity Navigator and the Wise Giving Alliance, but AIP is smaller and tends, as far as we can see, to have both a more nuanced view of nonprofit ratings at times and, at the same time, a willingness to call out some nonprofit high-flyers quite openly.

Everyone probably remembers the expose of Mortenson’s story (written in best selling books such as Three Cups of Tea and Stones into Schools) which revealed that his accounts of being nursed back to health by Pakistani villagers after his failure to scale the second tallest mountain peak in the world and his subsequent kidnapping and release by the Taliban were inaccurate. Author Jon Krakauer was among several who exposed the lies in Mortenson’s books, but it was Borochoff who took the lead in calling out Mortenson and CAI for financial improprieties.

AIP’s investigations began long before the 60 Minutes and Krakauer reports, raising “concerns about the lack of segregation between the organization’s finances and Greg Mortenson’s personal business interests,” primarily CAI’s marketing of Mortenson’s books through online retailers with no indication on CAI’s 990s that the nonprofit was receiving any revenue from those book sales. More of the nonprofit’s expenses went to promoting Mortenson and his book than to building schools. AIP’s requests to CAI for its audited financial statements revealed that there were none–for an organization with an operating budget of several million dollars. Prompted by AIP, CAI finally got an audit in 2010 for its 2009 fiscal year, but did not response to several questions about Mortenson’s and the charity’s operations.

Borochoff is nothing but dogged. This article from AIP’s magazine identifies continuing holes in Mortenson’s and CAI’s stories and explanations. AIP’s conclusion? It’s time for Mortenson to go due to having “breached donors’ trust to a degree that CAI will be unable to recover from, in AIP’s opinion, with Mortenson at the helm.” Our question: Will CAI be able to recover even without Mortenson as executive director?—Rick Cohen