The Association of Certified Fraud Examiners’ (ACFE) Report to the Nations found that while only 2.4 percent of fraud found in 2016 was attributed to religious, charitable, and social services organizations, the median fraud loss for these groups was $82,000.
Sure, that kind of money can’t bring down an entire business, especially a bigger nonprofit. However, it’s good to think about nonprofits of all sizes. That kind of monetary loss is enough for some decent growing pains while trying to recuperate from it.
If this is your first rodeo with owning a nonprofit, there are some things that you should be aware of in order to keep your organization safe. If you’re not sure what you can do to prevent fraud, it’s simple. It’s time to think outside of the box. Here’s what nonprofits can do in order to keep everyone safe for years to come, via CliftonLarsonAllen Wealth Advisors.
Hire the Right People and Stay Proactive
While most offenders are first-timers, it’s important to stay vigilant from the hiring process forward. Look at a candidate’s references, work history, credentials, pre-employment drug testing and criminal background checks. If anything, having background checks at all shows how seriously your work takes the act of fraud in the workplace.
Have a Formal Fraud Policy and a Code of Conduct
It’s clear that you’re going to have some issues to consider when it comes down to having a policy in place. Making sure to cover your bases with an extensive one that every employee needs to read while onboarding is crucial to the entire hiring process.
Prosecute All Offenders
If someone does wrong, follow through with punishing them. Every employee should know what’s going to happen if they get caught up in fraudulent activities while working or volunteering for a nonprofit. If you’re too lax about it, your employees won’t take any sort of punishment seriously.
Allow Job Rotation and Vacations
You can’t just expect workers to keep going on like they won’t run out of gas. Everyone needs time to deconstruct and de-stress, which is where job rotations and vacations come in handy. Job rotations mean that an employee can’t get burnt out on the same task while the vacation is needed for mental health.
Establish Internal Controls and a Whistleblower’s Hotline
Thinking outside of the box is the best way to prevent fraud. If you’re thinking about what’s in front of you, you won’t worry about any other exposures at all. Have steps in place to protect your business for the long-term while also using a third-party in order to allow workers to speak freely, without fear of blowback later.
Commercial insurance is a necessity for any business, especially nonprofit organizations that are trying to prevent any fraud from happening. However, you might be looking at different exposures than any other normal business might possess. For this reason, it’s important that your commercial insurance package is specifically designed to address the exposures of the nonprofit sector. At David. G Sayles, we are experienced in insuring nonprofit and social services organizations, and would be happy to discuss your insurance needs with you.
About David G. Sayles Insurance Services
At David G. Sayles Insurance Services, we strive to protect the investments of business owners like you. Our comprehensive policies are customized for you to provide the exact coverage you need. For more information, contact us today at (800) 439-0292.