It always saddens me when I read stories about nonprofit employees arrested for embezzlement. Such incidents diminish the reputation of the agencies and in some cases can delay delivery of services to families in crisis.
With most nonprofits struggling to survive, government grants being scarcer these days, and donors and funders reluctant to donate to administrative costs, it's not surprising that financial departments are shrinking. In some cases, nonprofits can only afford to hire one finance officer for the entire operation.
But that's still no excuse for lack of vigilance.
Executive directors today are in a bind. Too many of them are writing grant proposals, raising money, hiring new employees, firing employees, writing funder reports, overseeing events, managing programs and ordering pens and toner and stamps.
This is why a strong of board of directors is necessary. Too often, board members are pressured into becoming a treasurer as long as no extra work is involved. Yes, there are board members who review financial reports with the finance officer, but in my experience, this practice is rare.
As a result, some unscrupulous employees take advantage of the lack of oversight and write too many checks to themselves. When they are finally arrested, a nonprofit's image is often diminished and donations drop.
While nonprofits carry insurance to recover stolen funds, in the interim, their public image is tarnished — something no agency can afford.
If you are on a nonprofit's board of directors, there are several actions you can take:
At your next board meeting, ask your executive director about the agency's check approval process.
Make certain that the board treasurer meets monthly with the finance officer and reviews all spreadsheets.