Fraud Risks in the Nonprofit Sector

The nonprofit sector might seem safe, but every organization has its risks. Fraud can happen, and you need to be aware of when it happens. Over 1.5 million nonprofits are registered in the United States, according to the National Center for Charitable Statistics, which creates many opportunities for employee or external fraud/ A 2014 report found that 46 percent of fraud cases that occur involve multiple perpetrators, making fraud something that all organizations should safeguard against. With engagement and dynamic risk assessments, you will able to see when something happens and what effect it has on your nonprofit, which will allow you to quickly course-correct.

 

Skimmed Funds Can Happen

Skimmed funds are difficult to detect, with three types to often deal with: skimming, purchasing, and financial fraud. Each scheme must be addressed accordingly. Skimmed funds are most easiest to detect when someone can’t afford to pay what it’s worth. For example, say the president of an organization personally solicited and collected contributions from donors. He skimmed more than $4 million of contribution income over a 15-year period before being detected.That means you should always keep check of your funds. You never know when something is going to happen, and it can happen to you at any time.

Purchasing While Having Fraud

The purchasing function is the most common target for fraud. Signs of fraud include shell company schemes and abuse of a credit or debit card for personal purchases. Some of the most common fraud purchases include abuse of a corporate of debit card, expense reimbursement schemes, writing organizational checks to pay real bills and shell company schemes.

Fraud Risk Management is Key

Fraud risk management is a huge factor that requires you to get off the ground. Risk management allows you to handle day-to-day activities, and it also allows you to take care of certain duties that you may not want to care care. By engaging with your employees about workplace fraud, you will be able to show others how fraud works and how it can be avoided. In order to avoid fraud, you should utilize your personnel by engaging in an ongoing system of fraud deterrence. Make sure you always change your passwords and change up your usernames, as it will allow you to avoid cases of fraud. Never use the same password for everything, because it will be that much easier for someone to figure it out.

About Domenick & Associates

At Domenick & Associates, we specialize in protecting small to mid-sized IT firms. Our coverage is custom tailored with your clients in mind to guarantee them the best protection. For more information about our products, contact us today at (215) 629-5701.