Non-profit organizations are typically understaffed, without a lot of management oversight, and operate in an environment of trust. These conditions can make them easy victims of embezzlement and financial fraud.This article focuses on non-profits in Oregon, but the ideas certainly apply to groups nationwide. With a small organization, and often only a single person in charge of managing finances, the ease of someone “borrowing” funds from the organization accounts can make it very tempting to people who may be in personal financial trouble.
It also spells out the typical embezzlement circumstances in most of these situations. It is not commonly just a a deliberate scheme to enrich one’s self. Many people who are ultimately convicted of embezzlement say they only meant to borrow the money temporarily, and meant no harm. They always planned to pay the money back quickly. But, very often it doesn’t play out that way.
New and continuing financial problems crop up, and paying back the money doesn’t quite work out.
That, and the fact that once someone has taken money from an organization and realize that no one even noticed, the temptation to continue doing so can be huge. And gradually the problem spirals out of control.
A few good basic tips of financial oversight can make a big difference in your organization.
In particular, don’t have the same person issuing checks be the one who reconciles the account and does the bookkeeping. This will help insure that any irregularities will be flagged quickly. It will also make it less tempting for someone to borrow some cash from the organization, knowing that another person is reviewing the transactions.