Facing Up to Fraud in the Flock
One out of three churches is defrauded. Nonprofits lose 5 percent of their revenue annually to embezzlement. What can be done?
We encourage congregations to trust – but verify – and protect themselves with bonding insurance.
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“Facing up to fraud in the flock” is based on an in-depth interview with Christian Spearow, a vice president at Jitasa, the nation’s largest accounting and bookkeeping form devoted solely to serving nonprofit organizations.
It’s shocking but true: One out of three churches is defrauded.
What does that mean? Its simplest definition is stealing: Someone is taking money from your church or nonprofit. What makes defrauding and embezzlement different from outright burglary is the way the crime is committed. Instead of breaking down a door, an insider schemes to take money unnoticed.
“ These crimes typically involve some form of deceit, subterfuge or the abuse of a position of trust, which distinguishes them from common theft or robbery. ”
Because churches want to think the best of everyone, they often get sloppy when it comes to managing finances. One unaccountable person can cause millions in losses – and that’s not hyperbole.
Churches can begin with simple accountability measures that are equally applied to everyone. These include:
Requiring multiple signatures on checks.
Splitting up responsibilities so no single person has total control over finances.
Reviewing credit and debit card billing. What is being purchased and why?
Finally, if possible, engage an outside accountant to help manage and oversee the integrity of your finances.
Facing Up to Fraud in the Flock: Interview with Christian Spearow of Jitasa
Christian Spearow is a vice president at Jitasa, the nation’s largest accounting firm exclusively serving nonprofit organizations.
AUDIO VERSION: FACING UP TO FRAUD IN THE FLOCK
Financial Bonding Insurance protects your church in the event of fraud-related losses
While creating a culture of accountability is the first line of defense, you may also want to consider a backup plan. If someone steals big sums from your church or ministry, you may not get any of it back. How will you cope? Financial bonding insurance can help churches and nonprofits recoup financial losses that result from criminal activity. An insurance payment won’t erase the memory or restore mistrust, but it can take the sting out of the financial and operating losses. That way you can focus on one problem at a time.