Protecting Your Organization’s Assets From Theft
Dozens of Non-Profits are victimized by dishonest volunteers every year. The average fraud/theft scheme goes undetected for 18 months. 93% of all frauds are committed by first time perpetrators.
The loss of funds could be devastating. Members will feel betrayed and may blame officers for not preventing the theft. Level of trust declines. Membership numbers could decline, especially if not properly handled. Support ($) could dry up as contributors want to believe their money is being used appropriately.
Officer and/or committee member positions go vacant for long periods. Lines of communication deteriorate. (i.e. newsletter becomes infrequent or non- existent, web-page outdated) Volunteers “burn-out”. Hard to adequately staff booths, etc. A normally active officer/volunteer suddenly drops off the face of the earth. (No contact) Be aware of officers having personal problems. (i.e. divorce, loss of job)
Developed by noted criminologist and professor, Dr. Donald R. Cressy Suggested that three circumstances must exist for an otherwise trustworthy person to steal. ◦ Motive or Pressure ◦ Opportunity ◦ Rationalization
Motive / Pressure - Even good people sometimes find themselves financially strapped, addicted to drugs or alcohol or just not able to live within their means. Opportunity – Lack of oversight may lead a volunteer to think they can “get away with it”. Rationalization – “I deserve it for all my hard work.” or “They’ll never miss it.” or “I’ll pay it back before they notice.”
Remove “Opportunity” from the triangle. ◦ Your organization must have well thought out and effective security measures. ◦ Create a system where all financial transactions are well documented and transparent to members/auditors.
ALWAYS require two signatures on checks. Never leave volunteers alone with cash. Before shutting down a booth/show count cash proceeds in presence of two individuals. Establish a finance committee to review financial reports. Consider a complete audit, preferably by an independent CPA.
Don’t leave cash in an unsecured container. Don’t allow volunteers to take cash home. Count cash proceeds in front of two people and turn cash over to treasurer to be deposited that day. Keep petty cash to $ or less.
Avoid making any payments from the daily cash receipts. Consider a debit card as its use generates a record. Always require receipts, vouchers, etc. before any payments to a vendor or volunteer. Always create a paper trail. Use a book keeping software to record transactions. (i.e. Quicken, Quick Books) Require treasurer’s report to be published in each newsletter.
Even the best controls only limit your risk. Fidelity Bond – Ensures if your funds are stolen they will be recovered. Liability Insurance – protects officers, volunteers and third parties.
First and foremost report the theft as soon as it is discovered/verified. PROSECUTE! You can’t afford to give the impression that your agency will tolerate even the smallest of thefts. Be honest with members about the incident. Don’t hide any of the ugly facts. Be sure to let your members know what measures you will take to prevent a re- occurrence. Incorporate changes into by-laws.
Thanks for your attention. Any questions or comments?