You don’t need to look hard to find an example of a company that has been victimized by employee theft.   Just pick up the newspaper, scan the Internet or watch the news and you will likely find a story or two about a business being victimized by fraud.  Charitable organizations are no exception, especially smaller ones, which can be frequent targets because they often lack the appropriate number of personnel in the finance area to segregate responsibilities.   Allowing employees to be unsupervised or have too much control in any one area– be it in the area of cash receipts or cash disbursements – can leave an organization vulnerable.

Fraud is costly and embarrassing, both in immediate losses from the theft as well as future losses due to lack of credibility with donors.  Potential donors and granting organizations may be less inclined to give to an organization for fear that their gift will fall victim to employee theft.

What to do?  The great American historian Benjamin Franklin once quoted, “An ounce of prevention is worth a pound of cure.”   Good preventative measures and detection techniques are any organization’s best means to fight against fraud.  Prevention is a certain way a charitable organization can mitigate the risk of being affected by costly and potentially embarrassing fraud.  The Association of Certified Fraud Examiners (ACFE) has a Fraud Prevention Check-Up tool available to both members and nonmembers.  This check-up is an excellent resource for an organization looking to grade the strength of its fraud prevention techniques.

Charitable organizations do not need to fall victim to fraud.  Management must understand the risks and take preventative measures to reduce the opportunity for fraud to be committed within their organization.  Using resources like those offered by the ACFE and consulting with the Certified Fraud Examiners at ORBA, your organization can significantly mitigate its risk.