Let’s start with the easy part.  There is nothing in the Sarbanes-Oxley law that specifically pertains to enforcing restrictions on charitable contributions.  Sarbanes-Oxley was written primarily to control conduct in publicly traded for-profit business entities.  There are only two provisions of that statute that apply to nonprofits, and that is only because they apply to everybody.  Those two rules are a prohibition on retaliation against whistleblowers who complain to federal (but not state or local) officials, and a prohibition against destroying documents when someone becomes aware of a federal investigation.

Ensuring that a donor’s wishes are followed is the job of the recipient organization, and particularly its officers and directors, who have a fiduciary duty to assure compliance. The state attorney general is the governmental official who has official authority to enforce those conditions, and investigating reporters in the media are the ones who often bring violations to public view.  But it is the officers and directors who have the front line responsibility.  In Pennsylvania, a hospital CEO who used income from endowments left for scholarships and research for the general purposes of a group of hospitals before they went bankrupt was convicted and spent nearly two years in a half-way house for disregarding the restrictions.  (See Nonprofit Issues^®, 9/02.)