Safeguard Your Nonprofit
With all of the goodwill and good works that nonprofit organizations accomplish, it’s hard to think of them in association with fraud. Unfortunately, not only are nonprofits not immune to fraud, but they are actually more likely to become victims. The key is to be aware that it can happen within your organization and without the proper safeguards, there is a pretty good chance it will.
Here are some steps to take to prevent fraudulent activity:
• Regularly communicate within your organization about fraud. This heightens awareness of abuse or fraudulent activity throughout the nonprofit and even can discourage potential perpetrators from acting.
• Segregate duties between staff with internal controls. Have different people write and sign checks. Make sure there is a chain of command for the approval process of expenditures. Multiple staff should be involved in collecting and recording fundraising funds.
• Keep a close eye on areas with frequent personnel fluctuations. Changes in key finance staff can leave an opening for fraud to occur.
• Perform routine checks of processes and documents. Just taking frequent looks can catch fraud in its early stages.
• IT department controls should include ensuring computer and network security. Do not conduct banking transactions using computers that are socially networked.
The damage to a nonprofit’s reputation can result in a public relations disaster that can last for years, even long after the economic impact of fraud has subsided. With the appropriate checks and balances, you can stop fraud before it starts.