Well the non-profit system isn't designed to allow people who embezzle money to be caught within a day or whatever. I don't think any accounting system is.
The fact that the thief is eventually caught shows that the system does work, and the amount of damage that has been done isn't fatal to the organisation.
There is going to have to be some amount of trust between the staff of an organisation and this trust can be abused to steal money, this is true in any organisation, it has nothing to do with being non-profit.
No, it doesn't show that the system works. According to the article, the board had to be strong-armed into allowing members to elect Sudarshana Banerjee by someone they'd actually banned from the space, and she's since resigned under pressure from the rest of the board. It seems clear that the entire board is complicit in covering up the misuse of funds and the non-profit system has done nothing to stop this or to make it possible for members to discover that it has happened.
For most small organizations there is no accountability except from the members, non-profit or for-profit. However non-management members of for-profits tend to expect less control. Generally those who want to help the most in an NFP float to the top (the board), but when a group of theives float to the top you are screwed no matter what style of organization you have. Then you have a conspiracy of people who can collude to hide their thefts and mismanagement.
I’m amazed how many people think there’s some all seeing eye watching everything a non-profit does. That’s no more true for a for-profit. Sadly it’s mostly the thieves who realize how little there is to prevent massive theft. Oversight/the Government only cares when it realizes it’s not getting money it thinks its owed, and that only shows up after YEARS of leaving accounting mistakes in the wake. Loosing non-profit status by not filing taxes is not only incompetet, but now the government cares because it wants taxes on any property owned by what it sees as a for-profit company now.
And the government doesn’t care about personal purchases made by the board using NFP funds. However it does care about the sales-tax it’s missing out on, and $30k is likely just barely enough for them to even care about that. It only turns into a criminal case when the crime is reported to the police because the members or the rest of the board realize theft from the org is happening.
Why the diatribe? Running any organization with a physical space is hard work. Hackers just want to work on projects, and keeping the doors to a hackerspace open is a pain in the ass. However it can be rewarding to the right people who want to learn more about running a non-profit. But it’s too easy for us to turn a blind eye and otherwise ignore what is going on behind the curtain because you just want to pay your money and have a place to hack. It’s ok for a few people to do that, but you need an active community of people involved in running the place. It’s also hard work creating a culture of open-nes from the boards perspective. Hackers are not always the most socialized folks, and inviting critisism is hard for anyone, let alone hackers to do. But creating a transparent board from the start helps the members to expect that transparency as new people fill the ranks. And if a board tries to go rouge it makes it harder as the members will be more likely to notice the lack of transparency. Not that it makes it impossible to commit theft at that point, any report provided by the treasurer is still just taken on good-faith without anyone else actually seeing the banking records.
The fact that the thief is eventually caught shows that the system does work, and the amount of damage that has been done isn't fatal to the organisation.
There is going to have to be some amount of trust between the staff of an organisation and this trust can be abused to steal money, this is true in any organisation, it has nothing to do with being non-profit.
Finances are transparent to the public.