Corruption and Malfeasance May Be The Rule, Not the Exception
The term "non-profit" as it relates to groups and organizations, is often bandied about regarding certain "businesses" to convey them as charity for different noble causes. For example, in a single hour of watching FOX News in the morning, a viewer will get commercials for three to four non-profit "charities."
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This is not to judge those charities, but to examine how the non-profit sector started in this country, how it has grown, what it has grown into, controversies surrounding it, and what its future should be.
The term non-profit really means "charity." Charitable groups have been around since the 1600's, mostly stemming from churches wishing to help the poor. They were also volunteer groups such as fire brigades, mutual aid societies, etc. Of course, now non-profits exist for practically every cause one can think of. There are approximately 1.9 million non-profit groups in the U.S. and possibly 2.5 if you count groups who are unregistered. US Nonprofit Statistics, Key Charity Finance Figures | PlainCharity
The largest advantage for organizing as a non-profit is that the group doesn't have to pay taxes and their donors can claim donations as tax exemptions.** Between 1975 and 1990, nonprofit revenues grew 227%, assets grew 150%, while U.S. GDP grew only 52% in the same period.
Non-profit revenue in Maryland has grown by 40% from around $78 billion in 2014 to $109.2 billion now . A huge bump in income came in 2020 as the sector grew to $98 billion due to PPP and CARE grant funding during the COVID Pandemic. COVID was a cash cow for non-profits!
Maryland’s nonprofit sector generates about $100–104 billion per year in total revenue, based on the most recent IRS Form 990 filings aggregated across all tax‑exempt organizations in the state. This makes Maryland one of the highest‑revenue nonprofit sectors relative to its size.
There are over 42,000 non-profit organizations in Maryland alone, some with headquarters in other states. Each of these non-profits has an average income of $2.4 million. Most of these non-profits are in the fields of hospitals and health systems such as Johns Hopkins, MedStar, etc. Universities and research facilities are the next largest sector followed by large foundations and grant makers.
Education Non-Profits
In Maryland, there are 18 private colleges/universities which are non-profit. Nationwide, there are 1,817 which generate $240-250 billion dollars. If all education non-profits are included in the tally, the number is $517.8 billion. These institutions include K-12 schools, pre-schools, museums, tutoring services, and, of course colleges and universities.
The nonprofit sector in education is no longer just brick‑and‑mortar schools or tutoring charities. It includes virtual schools, digital curriculum providers, adaptive‑learning platforms, online universities, and national technology‑driven research organizations.
Schools like Harvard ($49.5 billion), Stanford ($40.7 billion) and Yale ($40.9 billion), have tax-exempt endowments An endowment is given to a school by a specific group or benefactor. For example, Bucknell University graduate Kenneth Langone gave an endowment for a business management college at the university. Langone is the founder of Home Depot.
Schools and universities who have over 500 students and whose endowments equal more than $500,000 per student are charged a 1.4% tax on those endowment funds. This effects 30-40 universities.
Endowments are supposed to be used expressly for scholarships, endowed faculty positions, research, facilities, and even operations if designated by the endowment. They are NOT supposed to be used for private benefit or political causes. Only ten to fifteen cases of endowment usage violations have been documented in the past thirty years. Have authorities turned their heads to this kind of misappropriation? One wonders why tuitions are so high when universities are sitting on large piles of endowment cash.
Non-Profit Growth In Maryland
The percent growth in non-profits in Maryland is far outpacing the growth in population, making it one of the states in the United States with the most non-profits per capita. In fact, Maryland's population is dropping and the economy is failing. A recent poll by CNBC ranked Maryland as the second worst economy in the United States.
New poll ranks Maryland economy second worst as residents launch affordability push
So, while the state's economy is failing, non-profits in the state are taking up more of the economic landscape in the state.
The top 50 among these Maryland non-profits generate $42.8 Billion dollars a year. Johns Hopkins alone brings in over $10 billion. Twenty-five of these non-profits generate half of statewide non-profit revenue.
No matter how you look at it, non-profits in Maryland are a large part of the economy. And, judging by the numbers, they bring in a lot of "profit" to someone. Heads of these organizations often make seven figure incomes and people who sit on the boards of non-profits can often wield great power politically.
Many of the highest Non-profit CEO salaries in the United States are in the millions:
The Highest Paid Nonprofit CEOs in America | GiveScope
Non-Profit Non-Compliance In Maryland
In an article from March 11, 2026, THE EASTON GAZETTE wrote about how state non-profits are not only powerful, but, in many cases, non-compliant with state and/or federal reporting requirements.
Maryland Non-Profits Earn Millions Despite Being Non-Compliant - The Easton Gazette
Apparently, some non-profits in Maryland either forgot or just ignored the reporting requirement. Actually, it's estimated that 9,000 of them are non-compliant. One would think, as one person commented on a recent story about this problem, that Governor Moore would KNOW how to address the non-compliance problem, since he came from a non-profit organization, the ROBIN HOOD FOUNDATION, a non-profit created to address issues of poverty. The EASTON GAZETTE referenced this in an article regarding Moore's background and net worth:
From the article:
"He (Moore) ran a big non-profit from 2017-2021, the Robin Hood Foundation, where he made $690,000 a year, possibly closer to a million when perks and benefits are included."
Information on the executive compensation of the Robin Hood Foundation:
Executive Compensation at the Robin Hood Foundation (2021) | Paddock Post
But, as per usual, Governor Moore seems to be more interested in running for higher office.
In the 2026 legislative session, HB 122 was proposed. This bill would have prohibited state funds from going to non-compliant non-profits, It should have been an easy bill to pass except for one important fact about the committee that would have had to pass the bill so it could get to the floor. As reported by WBFF FOX 45:
Almost half of the Government, Labor and Elections Committee appears to have strong ties to Maryland’s nonprofit community, including members employed by nonprofits or active in nonprofit organizations. The committee (Government, Labor, and Elections) chairwoman is employed by a council that represents nonprofit labor unions. Del. Kris Fair is identified as the executive director of a Frederick nonprofit. Source: Millions in state dollars at stake as nonprofit funding crackdown bill stalls
Many thought the bill was a "no-brainer" particularly since so many non-profit inconsistencies have been discovered in Maryland and national non-profits.
The bill did not pass. In fact, it stalled in the GOVERNMENT, LABOR AND ELECTIONS COMMITTEE*. Yes, the same committee mentioned above. Delegate Ryan Narwocki had this to say about the lack of action. Again from FOX 45:
State Del. Ryan Nawrocki said the connections extend beyond one committee. “It is more profound than just that committee if you look at the entire legislature I think you'll get the same result,” he said. “Probably half is employed by a nonprofit organization so it's a fox guarding the henhouse there. I think there's a legitimate question to ask if these folks should be voting on nonprofits if they have something to do with nonprofits.” SOURCE: Millions in state dollars at stake as nonprofit funding crackdown bill stalls
Other estimates say 85% of lawmakers in Maryland are either employed by non-profits or sit on non-profit boards. By law, legislators are NOT supposed to vote on issues that directly impact them. Didn't seem like they applied that law in this situation. The bill did not receive a vote to move it out of committee.
Who usually makes up the boards of these non-profits? Non-profits don't sit around waiting for volunteers for their boards, they recruit influential people, people from the industry they are focused on, people with money, etc. They also recruit those who can help them with legislation in state and federal assemblies. Clearly, Maryland has plenty of lawmakers who fall into that category.
Non-Profits In Talbot County
What about Talbot County?
Talbot County’s nonprofit revenue has grown slowly but steadily over the past decade, rising from roughly $150–180M in the mid‑2010s to about $220–260M today, based on NCCS Core Files (IRS Form 990 aggregates). The county shows stable growth, but no major jumps, because it lacks large hospitals or universities that dominate revenue in other Maryland counties.
Nonprofits in Maryland - Nonprofit Explorer - ProPublica
Maryland Nonprofits — 42,655 Organizations, $100.5B Revenue
Top Talbot County Nonprofits by Revenue (Most Recent 990 Cycle)
1. Chesapeake Bay Foundation
Revenue: ~$150M–$170M Type: Environmental conservation Why it’s large: National‑scale fundraising, major restoration programs, federal grants, and membership revenue. Note: Headquarters is in Annapolis, but Talbot County hosts major operational centers and program activity, so it appears in county‑level aggregates.
2. Chesapeake Bay Maritime Museum
Revenue: ~$10M–$15M Type: Arts, culture, heritage Drivers: Exhibits, education programs, capital campaigns, and waterfront facilities. Trend: Steady growth; major capital projects have boosted revenue in recent years.
3. Talbot Hospice Foundation
Revenue: ~$6M–$8M Type: Healthcare & end‑of‑life care Drivers: Program service revenue, Medicare reimbursements, and strong local philanthropy. Trend: Stable, with slight increases tied to expanded services.
4. Mid‑Shore Community Foundation
Revenue: ~$5M–$7M Type: Philanthropy / grantmaking Drivers: Donor‑advised funds, estate gifts, and regional grant programs. Trend: Consistent growth; assets and grant volume have increased steadily.
5. Chesapeake Center
Revenue: ~$4M–$6M Type: Human services / developmental disabilities Drivers: Program service revenue, state contracts, and community support. Trend: Stable; revenue tracks service expansion.
6. Talbot Interfaith Shelter
Revenue: ~$1.5M–$2.5M Type: Housing & homelessness Drivers: Grants, capital fundraising, and expanded transitional housing programs. Trend: Strong upward trajectory over the past five years.
7. Waterfowl Festival
Revenue: ~$1M–$2M Type: Arts, culture, conservation Drivers: Annual festival revenue, sponsorships, and conservation grants. Trend: Stable; revenue fluctuates with event scale.
8. Talbot County Free Library Foundation
Revenue: ~$1M–$2M Type: Education & community services Drivers: Capital campaigns, grants, and community fundraising. Trend: Moderate growth tied to facility improvements.
In summary, there are:
- 609 nonprofits in Talbot County.
- $574.7M total income reported across all organizations.
- $936.7M total assets.
SIDE NOTE: Listing these non-profits does NOT imply that there are any problems with their reporting, use of money, etc. It is merely for informational purposes.
So What Is The Problem?
So, what is the problem with non-profits in the United States? Shouldn't we be happy that there are so many? Isn't the idea of a "non-profit" a good one?
First, let's examine the monitoring of these groups. Every non-profit is required to file with the IRS/State yearly. Yet, we have found that some groups haven't met that most basic of requirements.
For example, the Baltimore group WE ARE US, failed to file. The organization was given $6 million dollars from Maryland's Department of Juvenile Services, but has yet to make its 2024 Form 990 publicly available, despite Maryland law requiring timely public access. Here is a timely report by WBFF FOX 45:
No paperwork? No problem as 7% of Maryland nonprofits deemed delinquent
Accounting experts cited governance gaps, missing board lists, and absent conflict‑of‑interest policies in the groups documentation. Baltimore Nonprofit Scores $6M State Deal As Tax Filings Raise
Another group, THRIVE ARTS, received $900,000 from the Baltimore Children and Youth Fund, but had their status revoked for failure to file required documents with the State and feds for three years. $900,000 in Taxpayer Money Went to Arts Charity With No Public Accountability | CharityWatch
How does this happen? The IRS has 700 employees overseeing 1.9 million non-profits. Maryland has 10 staff members overseeing thousands of non-profit organizations. Let's face it, no one likes the regulatory end of government, but, if groups are going to get tax exemptions, they need to be regulated.
And, of course, there is always the lurking possibility that some of these organizations think they will get away with non-compliance because of who they know, who is on their board (remember those legislators?) or because of the "charity" they support. Perhaps this is why non-profits from other states come to Maryland to register.
Another problem is that many of these non-profits are now seen as "filling the gap" on government services or providing a necessary community need. For example, let's create a fictional a non-profit organization which provides facilities for youth activities, health maintenance, etc. Suspending their non-profit status could end those services for a community. This could lead officials to "look the other way" or extend filing deadlines or even informally exempt certain groups from requirements.
In many cases, the boards of these non-profits are poorly trained or see themselves as a rubber stamp for whatever an executive director wants, even if that is illegal. For example, millions of dollars may be donated for a specific capital campaign but an executive director, who has either poorly managed staffing or underestimated costs, moves those funds to operating costs. This is not legal, but a board may choose to pretend it didn't happen.
A non-profit board member is not paid and, in many cases, has a full-time job in another corporation. They may not have the time nor the emotional capacity to deal with an executive director's terrible decisions. They also may want to distance themselves from irregularities to protect their own reputations. If they are a lawmaker, they may actually intercede for the group. Hence laws requiring more stringent oversight like HB 122, don't even get on the floor of a legislature.
And of course, there is always the problem of conflicts of interest. For example, imagine that a non-profit is created to give tablets to school children. If a board member runs a company that sells tablets, that could be a conflict if the non-profit buys their tablet computers. It happens more often than people know.
Financial malfeasance is more prevalent than ever in the non-profit fundraising sector. Sometimes, fundraisers either misrepresent or lie about the use of donations. If an executive director or his/her staff isn't honest, records can be destroyed, funds can be misused. Recent reports by independent journalists like Nick Shirley, have shown that these things happen more than most of us know and costs the United States taxpayers hundreds of billions of dollars.
Misuse of restricted funds is usually hidden via reclassification, co-mingling, opaque reporting, and governance practices that violate donor intent.
Co-mingling restricted and unrestricted funds means mixing restricted funds with operating expenses or other purposes. This keeps donors from tracking where the restricted funds are being spent and obscures financial malfeasance. Expenditures appear to be legit, but they are not being done according to the rules.
Sometimes non-profits will "reclassify" restricted gifts as "unrestricted" by claiming the donor's intent was "ambiguous." They will also use vague and misleading budget categories such as "program services" or "community outreach". The latter is a very popular tactic in the education field.
Non-profits will also shift restricted funds to cover deficits by labeling that practice as "temporary internal borrowing" and then failing to repay the restricted funds. They may also fail to track these restricted funds and blame outdated technology.
Another popular practice is to drain restricted funds by approving contracts for services with companies that are owned by trustees or board members.
Finally, non-profits will delay FORM 990 reporting or actually manipulate the information on this form. Delaying reporting seems to be one of the most popular tactics.
Corruption in non-profits costs the U.S. taxpayers billions of dollars each year in lost tax revenue.
Solutions?
Many might ask if non-profit organizations are necessary. Sadly, at this point, yes. Non-profits have woven their way into the federal government and many state and local bodies as well. Quite frankly, the government can't and shouldn't fund every cause.
A long term, pervasive problem like corruption within non-profit organizations will take difficult, long term and extremely stringent reforms.
First, potential board members need to be trained in fiduciary‑duty (UPMIFA, conflicts, restricted funds) before voting on budgets or endowment policy. Many times, ignorance of board members allows ulawful activity to occur.
There also needs to be independent oversight on non-profit activities as well as total transparency via publicly published meeting minutes and possibly meetings. Conflict‑of‑interest enforcement needs to be strict with public disclosure of any and all related‑party transactions. Trustees must be barred from voting on contracts that benefit themselves or family. Financial reports need to be clear and transparent with any and all use of funds, restricted and unrestricted, reported. Board members and donors need to understand the limits on the usage of restricted funds.
There must be strong state Attorney General independent oversight. This may include larger AG office staffs to accomplish this oversight. Audits must be independent and conducted every two to three years. Long term conflict of interest registries should be maintained in the AG's office. Board members and executives of non-profit should be required to sign legally binding annual compliance certifications.
Donors also need to be educated regarding how non-profits are allowed to function and what requirements for compliance are. They should be able to easily check the "record" of non-profits for reporting, compliance etc.
Probably the most important steps of all are defending against "quiet" corruption which includes hidden misclassification of restricted funds, opaque related‑party contracts, and boards that don’t understand their legal duties. Fixing those three areas prevents 80% of real‑world abuse. Most embezzlers don't start out stealing large amounts of money, they begin with smaller money transfers, some only hundreds of dollars. Once emboldened and having a proven model to sneak funds where they want, they become more proficient at theft.
Even the smallest of local non-profits must be carefully scrutinized to assure that public tax breaks are managed legally and properly.
Although we don't necessarily agree with municipalities donating tax dollars to non-profits, towns can create their own ordnances and guidance for non-profit organizations the town would support. Here is a sample which was generated via research and artificial intelligence for a small town. It DOES NOT REPRESENT ANY ORDNANCE PROPOSED BY ANY TOWN. IT IS MERELY FOR REFERENCE:
Nonprofit Governance & Transparency Ordinance
Section 1. Authority
This Ordinance is adopted pursuant to the authority granted to the Town under Article XI‑E of the Maryland Constitution, Md. Local Government Article §5‑202, and Town Charter, including the Commissioners’ authority to regulate entities receiving Town funds, using Town property, or performing public‑purpose services within the Town.
Section 2. Purpose
The purpose of this Ordinance is to ensure that nonprofit organizations supported by the Town operate with integrity, transparency, and accountability, and that public funds, public facilities, and charitable assets are used consistent with donor intent and the public interest.
Section 3. Definitions
- Nonprofit Organization — Any entity organized under 26 U.S.C. §501(c).
- Town‑Supported Nonprofit — Any nonprofit receiving Town funds, grants, fee waivers, in‑kind support, or access to Town‑owned facilities or property.
- Restricted Funds — Donations or grants designated for a specific purpose by the donor or grantor.
- Related‑Party Transaction — Any financial transaction involving a board member, officer, employee, or their immediate family.
Section 4. Applicability
This Ordinance applies to all Town‑Supported Nonprofits. Compliance is a condition of receiving Town funds or benefits.
Section 5. Governance Requirements
5.1 Board Training
All board members of Town‑Supported Nonprofits must complete annual fiduciary‑duty training, including:
- Fiduciary duty
- Conflict‑of‑interest rules
- Restricted‑fund management
- Basics of UPMIFA and Maryland charitable‑trust law.
Training may be provided by the Town Manager, Maryland Nonprofits, or another accredited governance organization.
5.2 Conflict‑of‑Interest Policy
Each nonprofit must adopt and publicly post a conflict‑of‑interest policy that includes:
- Annual disclosure statements.
- Prohibition on voting on related‑party transactions.
- Public posting of any approved related‑party transactions within 30 days.
5.3 Board Structure
- Minimum of three independent directors not employed by or contracting with the nonprofit.
- No more than one‑third of the board may be related by blood, marriage, or business ties.
- Term limits of two consecutive three‑year terms.
Section 6. Transparency Requirements
6.1 Public Reporting
Town‑Supported Nonprofits must provide the following to the Town Manager annually and publish them on their website or a Town‑hosted page:
- Annual budget.
- Annual financial statements (audited if revenue exceeds $500,000).
- IRS Form 990.
- Board meeting agendas and minutes within 30 days of approval.
- Annual restricted‑fund report: purpose, balance, expenditures.
6.2 Public Access
All records required under this Ordinance must be accessible to the public without charge.
Section 7. Restricted‑Fund Protection
7.1 Tracking
Nonprofits must maintain a ledger of all restricted funds, including:
- Donor intent.
- Restrictions.
- Annual expenditures.
- Remaining balances.
7.2 Modification of Restrictions
Restrictions may only be modified with:
- Written donor consent, or
- Court approval under Maryland charitable‑trust law.
Section 8. Use of Town Funds
Town funds must be used solely for the purposes stated in the grant agreement or facility‑use agreement. Nonprofits must submit:
- Quarterly expenditure reports.
- Documentation of compliance with grant conditions.
The Town Manager may require additional documentation for any expenditure involving Town property or facilities.
Section 9. Whistleblower Protection
Town‑Supported Nonprofits must adopt a whistleblower policy that:
- Protects employees, volunteers, and board members from retaliation.
- Provides a confidential reporting channel.
- Allows direct reporting to the Town Manager or Town Attorney.
Section 10. Oversight & Enforcement
10.1 Compliance Reviews
The Town Manager may conduct compliance reviews at any time and may request additional records.
10.2 Penalties
If a nonprofit fails to comply with this Ordinance, the Commissioners may:
- Suspend or revoke funding.
- Terminate facility‑use agreements.
- Bar the nonprofit from future Town support for up to five years.
10.3 Referral
Suspected misuse of charitable assets may be referred to the Maryland Attorney General’s Charitable Enforcement Division.
Section 11. Coordination with the Town's Existing Code
This Ordinance shall be codified within the Town Code and administered by the Town Manager, consistent with existing permitting, inspection, and reporting workflows used for:
- Rental permits
- Building and zoning compliance
- Town grant administration
Section 12. Severability
If any provision of this Ordinance is found invalid, the remaining provisions shall remain in full force and effect.
Section 13. Effective Date
This Ordinance becomes effective upon adoption by the Commissioners.
Want to Learn More About Non-profits?
If donors want to check the efficacy and honesty of any non-profit, they can go to:
Charity Navigator-Charity Ratings and Donor Resources | Charity Navigator
Charities (Maryland Sec. of State)
Guide Star Nonprofit data for donors, grantmakers, and businesses | GuideStar | Candid
KNOW BEFORE YOU DONATE! We believe there are many good non-profits out there. We hope citizens will become more educated before they donate to any non-profit.
*GOVERNMENT, LABOR AND ELECTIONS COMMITTEE* - This is also the committee that ran the special session on redistricting in Maryland this week.
**This applies to some non-profits and not others depending on the catergory.
SOME OF THE RESEARCH FOR THIS ARTICLE WAS OBTAINED FROM ARTIFICIAL INTELLIGENCE.
In full transparency, the author of this article runs a small chapter of a 501(c)(4) group which is part of a larger, national organization.
