13 Tips to Mitigate Fraud at Not-for-Profits

In a previous blog, we wrote about “Not-for-Profit Scams to Put on Your Radar." Here, we’ll turn our attention to tips—or hacks as younger, hipper people call them—in order mitigate fraud at a not-for-profit:

1. Develop a fraud prevention policy with procedures and guidelines in place that is embraced from the top down. Properly train employees to prevent, spot and report fraudulent activity.
2.  If a significant donation seems too good to be true, it may very well be. Research and confirm donations that are out of the ordinary, specifically with regard to size and source. 
3. Have the appropriate accounting and cash management controls in place.
4. Perform self-audits, and use an independent auditor.
5. Send money through secure channels, such as positive pay, where the not-for-profit and bank work from the same specification on a check registry.
6. Commit to a zero-tolerance anti-fraud culture, where perpetrators are prosecuted.
7. Include a whistle blower program in your fraud prevention policy where employees can anonymously report fraud to a third-party, toll-free number.
8. Require background checks of officers, employees and board members.
9. Segregate duties and mandate time off.
10. Invest in the appropriate safeguards for computer systems, including requiring passwords to be changed periodically, restricting employee access to systems and strong anti-virus software.
11. Have adequate theft, cyber, and directors and officers insurance.
12. Immediately report instances of theft to the appropriate authorities.
13. Use dual authentication when signing checks over a certain dollar amount.

While certainly not exhaustive, this list can give you some valuable ideas that can potentially save the organization a lot of time, money and heartache.