A recent Michigan Court of Appeals decision, Goldsmith v Faith Hope & Love Outreach Center Inc, unpublished per curiam opinion of the Court of Appeals, issued May 19, 2026 (Docket No. 371415), offers a pointed lesson for any nonprofit that partners with a for-profit entity to pursue federal funding and for the for-profit partners who lend them their credentials to do it.
Background
A certified registered nurse anesthetist founded a medication-assisted treatment company to serve patients with opioid use disorder. When a SAMHSA grant opportunity arose to expand access to those services in underserved populations, her company’s for-profit status made it ineligible to apply alone. She partnered with a local 501(c)(3) outreach organization, providing the clinical credentials and documentation the application required. The nonprofit’s director submitted the application.
What the nurse did not know was that the director had substituted her own contact information in place of the nurse’s in the section of the application designated for the project director. SAMHSA’s award notices went to the director alone. By the time the nurse discovered the grant had been approved through her own independent search of SAMHSA’s public website, the director had already begun unilaterally revising the budget to redirect funds away from the treatment company. The director eventually removed the nurse and her company from the project entirely and completed the grant work with a different partner. The treatment company received none of the awarded funds.
The Legal Theory and the Judgment
The nurse and her company sued, asserting identity theft under Michigan’s Identity Theft Protection Act, MCL 445.61 et seq., among other claims. The trial court granted partial summary disposition on the identity theft claim and, after an evidentiary hearing before a special master, entered a judgment of $693,653.50 against the nonprofit and its director jointly and severally. The Court of Appeals affirmed.
The identity theft finding rested on MCL 445.65(1)(b), which prohibits using another person’s identifying information to obtain money or property by concealing, withholding, or misrepresenting one’s own identity. Critically, this subsection requires no showing of intent to defraud; a distinction the court emphasized in dismissing the defendants’ primary argument on appeal. The director’s admission that she substituted her own contact information to ensure she remained the sole recipient of SAMHSA communications was sufficient. The judgment covered $360,000 in lost project-director salary, $253,613 in lost business profits, $16,000 for a facility lease deposit signed in anticipation of the grant, and $64,040.50 in case-evaluation sanctions.
What Nonprofit Leaders and Their Partners Should Take From This
The structural failure here was not the partnership itself, but the absence of any written framework governing how the partnership would function once funding arrived. Several specific vulnerabilities were avoidable.
Grant partnership agreements should be executed before the application is submitted. The agreement should define each party’s role and authority, establish that budget revisions require mutual written consent, and specify that award notices and grantor communications must be shared with all named parties. Leaving these terms to goodwill is a structural deficiency that litigation will eventually expose.
Any person whose name, license, or professional credentials appear in a federal grant application should insist that their own contact information appear alongside them. Control over communications with the funding agency is not a minor administrative detail; as this case illustrates, it is the mechanism by which a partner can be quietly excluded from a project they made possible.
Nonprofit boards have an independent governance interest in getting this right. Joint and several liability means that an organization’s assets, including a director’s personal assets, are both on the table when grant administration goes sideways. A board that approves grant applications without reviewing partnership terms is accepting risk it may not have priced.
Federal grant funding is competitive, the compliance obligations are real, and the parties in this case spent years in litigation over a program designed to help patients with opioid use disorder. The mission did not survive the relationship. Proper legal structure at the outset is what keeps the work intact when the relationship fractures.
This post discusses Goldsmith v Faith Hope & Love Outreach Center Inc, unpublished per curiam opinion of the Court of Appeals, issued May 19, 2026 (Docket No. 371415). It is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Our firm was not counsel for any party in this matter.
