Thanks to the folks at the Center for Nonprofit Excellence in Charlottesville for the invitation to come speak today on the topic of reducing risk of fraud for nonprofits. A great audience of Virginia nonprofit executives and board members turned out for this month’s edition of CNE’s brown bag lunch workshop series. We tackled the demoralizing topics of fraud and embezzlement and to how best position an organization to reduce the risk of being victimized (and how to respond if financial wrongdoing is suspected).
The powerpoint presentation will soon be posted on Slideshare, so take a look there or contact me directly if you’d like a copy.
We covered the sad realities that:
- nonprofits across America loses $40 billion each year to fraud
- the perpetrators are typically “insiders” (employees or volunteers in positions of leadership and/or trust within the organization)
- it can take a long time to discover a fraudulent scheme and, when discovered, it can be very expensive to investigate and address the problem
- a variety of direct and indirect consequences to a nonprofit organization–all negative and potentially devastating–can result from an incident involving fraud
- there’s no guaranteed strategy or bullet proof method of prevention, but there are steps a nonprofit organization can take to reduce the risk of being victimized and better position itself to avoid liability
Some of the suggested steps relate to: education and awareness, oversight and internal controls, having an engaged and proactive group of officers and directors, and insurance coverage.
The latest edition of the Perkins Law “Virginia Nonprofit Q & A Update” was released earlier this week, email me if you’d like a copy or be added to the distribution list. Next month’s issue will discuss the recent case involving a Virginia-based 501(c)(3) gymnastics booster club–how it lost its exempt status and what similarly situated organizations can do to avoid a similar fate.