Every year, millions of dollars are stolen or misappropriated from churches and non-profits across the country. The culprits are often the least expected people in the organization. Whether it is a pastor embezzling funds, an employee or volunteer abusing a corporate credit card, or a treasurer skimming charitable donations, there are numerous ways non-profits and religious organizations are susceptible to embezzlement and charitable asset diversion.
While the prevalence of such occurrences may surprise some, it is easy to see why non-profits and religious organizations are particularly vulnerable. They tend to be strong on mission and purpose but weak on administration and accountability. They often assume that their leaders and employees are trustworthy and underestimate the importance of putting protective measures and financial policies in place. Volunteer boards can also struggle to monitor and check strong executive leaders. Far too often, employees are given too much power and access to the organization’s funds and records.
Moreover, non-profits and religious organizations often operate with limited budgets and can underestimate the importance and value of paying for professional help. They go it alone to “save money” rather than pay for the advice of accountants, auditors, and attorneys familiar with the best financial practices and policies. Attorneys like those at Dalton & Tomich, who have decades of experience advising non-profit and religious organizations, can help implement the policies and keep up with the latest trends. People are always finding new ways to steal, so organizations need to find new and better ways to protect themselves.
Below are just a few ways religious organizations and non-profits can protect themselves:
- Do not leave financial authority to just one person.
- Establish an audit committee to review financial records and activities.
- Require the approval of more than one person or a committee for large transactions
- Have an independent, outside firm that is familiar with working with non-profits audit the organization’s financial records.
- Retain an attorney to help the organization address structural vulnerabilities in the organization and put into place written policies to address conflicts of interest and the financial activities and records of the organization.
If your non-profit or religious organization wants to do a better job of guarding against fraud, theft, and charitable asset diversion, please contact the attorneys at Dalton & Tomich.