The Chronicle of Philanthropy

A new federal lawsuit demanding that Greg Mortenson, the author of Three Cups of Tea, and his charity return millions of dollars of donations and book proceeds could shake up the nonprofit world.

Legal experts say that if the case, which is seeking class-ac-tion status, is allowed to proceed, it would give unprecedented recourse to people who feel they were duped into supporting a charity. It would also, they say, leave charities vulnerable to damaging lawsuits by unhappy donors and customers.

“If you follow the logic of this
lawsuit, you can say that anyone
who gives to a charity and then
finds out that they were mis-
led about something, they could
then file a lawsuit to make the
charity pay,” says Jack Siegel, a
Chicago lawyer and charity con-
sultant. “It’s very troubling.”
e-mail message to The Chroni-
cle that the “events described
in Greg’s book happened, and
while no one likes litigation,
we welcome an opportunity for
the facts to come to light and be
considered impartially through
the legal process.”
Mr. Mortenson has previous-
ly stood by his books and denied
any wrongdoing. He has admit-
ted, though, to taking some lit-
erary license in his storytell-

“It’s awfully thin. You have to offer more proof than watching ‘60 Minutes.’”

this lawsuit presents obstacles, they say, because it doesn’t distinguish between people who bought books and people who made donations.

At the same time, they say, the lawsuit may have made a smart end run around another issue that has in the past tripped up prospective lawsuits: the legal right of donors to sue a charity.

Courts have consistently limited the ability of donors to sue to correct alleged abuses at a nonprofit group, typically reserving that right for state attorneys general.

The Montana lawsuit, how-
ever, does not reach into the
business of the Central Asia In-
stitute. Instead, it sticks to the
claims of fraud involving solici-
tations for gifts.

The promotion of Greg Possible Class Action

USA

HOW MUCH DO AMERICANS GIVE?

The case could leave charities vulnerable to damaging lawsuits by unhappy donors.

tana, alleges that Mr. Mortenson and the institute fraudulently solicited gifts and earned book profits based on his claims about his experiences in Afghanistan and Pakistan.

The lawsuit stems from investigations by the “60 Minutes” news show and the author Jon Krakauer that have cast doubts about Mr. Mortenson’s accounts of his charity’s work and his own adventures. If the lawsuit is granted class-action status, Mr. Mortenson and the Central Asia Institute could be on the hook to return millions of dollars in donations and proceeds from the books. The lawsuit asks that the money and any additional damages be placed in a trust and used to build schools in Afghanistan and Pakistan, the Central Asia Institute’s stated mission.

Anne Beyersdorfer, spokes-
woman for the charity while
Mr. Mortenson is out on medical
leave, did not comment on the
case’s details, but she said in an
As the economic downturn has whipsawed giving
to many charities, everyone in the nonprofit world is
eagerly awaiting estimates by Giving USA that will
show how much was donated in 2010. Count on
The Chronicle to analyze the state of giving at
groups large and small—and working on every
type of charitable mission—in the June 30 issue.

ISSUE DATE: June 30

Legal Hurdles

But charity-law experts are not so sure that the lawsuit will pass muster in the courts.

“It’s awfully thin,” says Daniel L. Kurtz, a New York lawyer and former state charity regulator. “You have to offer more proof than watching ‘60 Minutes,’” he says.

Mr. Siegel, in Chicago, calls the suit frivolous.

“It’s like saying that everybody who learned that John Edwards was not necessarily the clean-cut guy they thought he was is now entitled to ask for their campaign contributions back,” he says.

The legal experts also say that the lawsuit might not clear some hurdles. Getting permission to represent an entire class of people is always tricky, and

COLOR DEADLINE: June 14

B&W DEADLINE: June 17

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