Swim or Sink?

In 2007 non-profit Ujima House earned $0 revenues but received a $45,000 Metro grant. In 2008 Ujima House received no government grants but earned $120,000 from "fees and contracts from government agencies." Seems like a sweet racket to be able to earn government money to pay back unearned government money spent on personal items for an absentee non-profit executive living in another state. And it is interesting to me that Metro stipulates a $32,000 penalty against Ujima House that is just under their reported current assets. That seems to allow the House to live another year for more government money next cycle. Earned? Unearned? Does it really matter?