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Monday, July 10, 2017

Charity Navigator Metric Mondays #18: Material Diversion of Assets

Today's Charity Navigator Metric Monday covers one of the most serious Accountability & Transparency metrics we evaluate: material diversion of assets.

A "material diversion of assets" refers to an unauthorized conversion or use of an organization's assets to an end different from the organization's stated purpose. This includes (but is not limited to) embezzlement or theft. A material diversion is a serious issue, and can call a charity's financial integrity into question.


Known material diversions are recorded on an organization's IRS Form 990, and the organization is required to describe what happened and the corrective steps taken to keep the issue from occurring again. Our analyst team first checks to see if there has been a diversion in the past two years, and if there has, then checks to see if the diversion is disclosed and corrective actions are decribed in Schedule O of the 990. Organizations that have described the diversion and corrective actions receive half credit for this metric.

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