(MONEY Magazine) – IRONICALLY, THE LATEST CHARITY SCANDAL, involving an alleged Ponzi scheme at the Foundation for New Era Philanthropy, could benefit donors to all charities. The case could put pressure on charity boards to protect the public against similar financial shenanigans.

In mid-May, the Securities and Exchange Commission and the attorney general of Pennsylvania sued New Era and its chief executive, John Bennett Jr., for fraud. The regulators believe the outfit conned nonprofit groups and prominent donors into investing in a scheme that left New Era bankrupt and its creditors out $273.5 million. Bennett denies any wrongdoing.

There have been a string of other misdeeds, including the United Way of America mess, in which former president William Aramony in April was found guilty of fraud. So an obvious question arises: Why were charity boards seemingly asleep at the switch again? One answer: Because nonprofits are often strapped for cash. "There is tremendous pressure on charities to increase revenues," says Bennett Weiner of the Council of Better Business Bureaus' charity watchdog group. "This is what can happen if that envelope is pushed too far."

Scores of charities ignored red flags in the New Era case. But W. Todd Bassett, divisional commander of the Salvation Army in Eastern Pennsylvania and Delaware, says the regional board acted with due diligence. He told Money that although it initially rejected a request to invest in New Era, it approved the move after getting more financial information. His unit is out $1 million.

Now the era of blind faith may be ending. The Evangelical Council for Financial Accountability, a group of 800 Christian nonprofits, is investigating the boards of member charities that gave money to New Era. Pennsylvania might sue some boards for negligence too.

For now, however, the best way to check out how a charity invests is by reviewing its Form 990 and any attached list of investments. If you see something risky, you may want to give to another group.

--Susan Berger