Pro tip | Preventing charity fraud

publication date: Jul 21, 2021
 | 
author/source: Ann Rosenfield

Most charity employees are great - hardworking, loyal, dedicated and smart. And for those of us working in the sector, we know it is an honour and a privilege to do this work.

Sadly there are a few folks whose reasons for working in the sector are not so benign. As an Executive Director, CFO, Board Chair, Board Treasurer, volunteer manager, or Fundraiser, you need to protect against fraud. If you think your staff or volunteers would never steal, you might want to check out this article about the Roslyn School fraud or the HBO movie with Hugh Jackman and then think about how the same situation could happen to your charity. Yes, sadly, even charity employees steal. In fact, your naivety is a perfect set up for a charity thief.

What can you do? A sound prevention plan is the best way to deter someone in the first place. Bear in mind that sometimes theft begins because someone needs just a bit more money and they have the intention to pay the charity back before anyone notices. Good controls are a great way to stop this before it happens.

Here are some common ways to prevent financial problems, 

  • Ensure that your Board has a chartered accountant as a Board member.
  • Contact the Chartered Professional Accountants Canada and double check that your Auditor is an actual member in good standing.
  • Give the Executive Director and Board Chair electronic access to the bank accounts and have them do unannounced spot checks periodically of the accounts.
  • As you start to think about in person activities, always have at least two people handle cash. This is particularly important for things like fundraising events.

You can't always prevent fraud but you can certainly keep a watchful eye. By recognizing that charity theft does exist and putting in some simple controls, you can reduce your risk. 

Thanks to Roland Cinco for some additional help on this piece.

Ann Rosenfield, MBA, CFRE is Editor of Hilborn Charity eNews.

Cover photo by Marissa Lewis on Unsplash

 



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