13 Tips to Mitigate Fraud at Not-for-Profits
March 07, 2017
By Amy MacFadyen
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:
- 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.
- 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.
- Have the appropriate accounting and cash management controls in place.
- Perform self-audits, and use an independent auditor.
- 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.
- Commit to a zero-tolerance anti-fraud culture, where perpetrators are prosecuted.
- Include a whistle blower program in your fraud prevention policy where employees can anonymously report fraud to a third-party, toll-free number.
- Require background checks of officers, employees and board members.
- Segregate duties and mandate time off.
- 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.
- Have adequate theft, cyber, and directors and officers insurance.
- Immediately report instances of theft to the appropriate authorities.
- 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.