A nonprofit organization can serve as a "pass-through" for grant or donor monies. This most often occurs when the recipient-to-be of the pass-through monies is in the process of applying for its tax-exempt status and the activities the recipient plans to undertake are consistent with the mission of the receiving nonprofit. A transaction like this places all the fiduciary (care-taking) burdens on the pass-through nonprofit to ensure that the monies are properly used and accounted for.
Maybe the Langston 21 Century Foundation in Washington, DC missed this fact or felt that the politics warranted it should just do the transaction, but the activity in question may be the undoing of a Washington, DC City Council member and could conceivably threaten the tax exempt status of the Foundation.
According to the Washington Post story,
...in 2007 the D.C. Council budget included $400,000 for youth baseball programs. At Thomas’ direction, most of that money was given as a grant to a group called the Langston 21st Century Foundation, a nonprofit that provides golf programs for youth. The foundation then paid most of the money to Thomas, who himself had a nonprofit called Team Thomas, which was described by Thomas’ office as providing youth golf, softball and baseball programs. Thomas’ group was allegedly going to carry out programs using the grant money.
The rest of the story suggests that Thomas then used much of this money to buy a pricey car and take a couple of leisure trips. And it appears that programming might not have even occurred.
Whether we focus on the fiduciary agent role or the general obligations of accepting grant monies, I would say this would be a good time for the Board to review its own policies and practices to avoid situations like this in the future. As a distant observer with limited facts I can only judge that there appear to have been serious failures in practicing good governance on the part of the Foundation board.