Fraud. Just the very word can send chills down the spines of any nonprofit owner. It is a terrifying prospect that you hope will never happen to you. One of the scariest things about fraud is the many different faces it can wear. Ten years ago it was much more difficult for an individual to pull the wool over the eyes of an entire organization. But now with the increased prevalence of the internet and the seemingly endless imagination of those willing to commit fraud, it is a prospect that is all too real for nonprofits.
Protecting your data and streamlining your internal processes are some ways to gain control over the activities in your nonprofit organization. The more visibility you have, the harder it is for someone to commit a fraudulent act against you. Although having a strong defense is a great start, in order to truly be safe you must also have a strong offense. Fraud can come from anywhere: potential business partners, individuals posing as donors, or even one of your trusted employees. To make sure you can spot fraud coming from any angle, you must remain completely vigilant.
The Chartered Professional Accountants of Canada have written a great blog post with several useful resources that can help your nonprofit start to protect itself against fraud today.
Recognize the signs of fraud, including:
- key records go missing when you are looking for them
- costs are escalating at a rate that is inconsistent with the budget
- a certain employee is working longer hours when others are not around
Practice activities that prevent against fraud, including:
- set up policies to prevent cheque and mail fraud
- safeguard your information technology infrastructure
- establish sound business practices
Want to learn more? Read the full blog post here.