The founders and board members of Architecture for Humanity (AFH), the influential and accoladed non-profit organization, is being sued for $3M for alleged mismanagement of funds, according to an exclusive report published by Architectural Record. The report helps shed light on the circumstances under which the non-profit closed down last year.

Among those named in the lawsuit, which was filed on June 10, are the founders Cameron Sinclair and Kate Stohr, both paid employees, and the 10 volunteer members of the board of directors, including the former head of the American Institute of Architects Clark Manus and architect Toshiko Mori.

According the lawsuit, AFH acted with "gross negligence", misappropriating restricted funds – donations made with specific caveats as to their use – in order to pay overhead such as executive salaries and promotional expenses.

The lawsuit alleges that AFH "completely disregarded the ‘restricted’ and ‘unrestricted’ nature of the funds and began a wholesale looting of the ‘restricted’ funds and used them to pay executive and staff salaries, promotional expenses, and other overhead items.”

The lawsuit was filed by Janina M. Hoskin, a court-appointed trustee. If awarded, the money would be distributed to 170 creditors including Nike, Amazon, the Make It Right Foundation, the AIA, the US Green Building Council and several universities, among other companies and non-profits.

AFH experienced a sharp rise in donations in 2009, which allowed the organization to greatly expand. But the majority of donations were restricted funds, which were not allowed to be used for expansion-related costs, like the purchase of a new building. By July 2012, the organization was running a deficit and used the restricted money for operational costs. Around this time, Sinclair and Stohr both left the company. The AFH later filed for Chapter 7 bankruptcy in April 2015 with only $200,000 left in cash.

“We are working with our attorneys to understand the decisions that were made during and after our transition," Sinclair told the Architectural Record. "We hope the case will be dismissed and are glad the chapters are continuing the good work.”

In related news:

• Introducing Open Architecture Collaborative, the rebranded offshoot of Architecture for Humanity affiliates
• Architecture for Humanity spin-off, Chapter Network, appoints Garrett Jacobs exec director
• Architecture for Humanity's Next Chapter: Garrett Jacobs, executive director of AFH-offshoot the Chapter Network, on One-to-One #11
• Anatomy of a non-profit: dissecting Architecture for Humanity's "death" and future