Should States Force Sarbanes-Oxley Provisions Onto Nonprofit Corporations?
The attorney general’s office is responsible for enforcing these fiduciary duties in most states. In California, the Attorney General investigates and audits charities for a wide range of illegal activity, including self-dealing by directors, improper loans, excessive compensation, and illegal or improper use of charitable funds. If the attorney general’s office uncovers fraud, it may sue the directors to recover funds and return those funds to the abused charity. Attorneys general are also empowered to dissolve nonprofits in extreme cases. Attorneys general, however, are limited in their ability to pursue nonprofit fraud. The realm of a state attorney general is vast and varied, and nonprofit corporations are unlikely to be a top priority. Even if nonprofits are a priority, the attorney general’s office has limited resources. For example, in California there are over 150,000 nonprofits and as of 2003 the Attorney General’s Office had ten attorneys assigned to the nonprofit sector scat
