Individuals are not the only ones that can fall victim to identity theft and other types of fraud. Charities and other nonprofits must take steps to protect their information and resources to prevent significant losses. According to data from the 2014 BDO Not-For-Profit Fraud Survey, almost one-third of nonprofits see fraud as a major issue for their organisation.

When NFPs experience fraud, the statistics are indeed sobering. 30% of all fraud involves the cooperation and participation of at least one member of the NFP, 16% of all fraud is committed by volunteers, and around 30% of all fraud at nonprofits involves the theft of cash.

Losses due to fraud can significantly impact a nonprofit’s ability to provide services to its beneficiaries. If a loss is large enough, an act of fraud may even threaten the NFP’s survival. While it is realistically almost impossible for nonprofits to protect against 100% of fraud 100% of the time, the following is a list of anti-fraud practices that your NFP can undertake to reduce the chances that it will fall victim to this type of crime.

Reduce the Potential of Fraud with Good Financial Controls and Sound Accounting Practices

The volunteer treasurer has a significant role to play in helping their nonprofit reduce their risk of loss due to theft and other types of fraud. Implementing proper financial controls, such as ensuring that the person responsible for collecting and handling cash payments is different from the person that makes the journal entries for these collections and deposits is a good place to start.

Conducting regular, timely reviews of deposits, bank reconciliations, and using an external, independent party to carry out audits of the nonprofit’s books can also help protect your nonprofit from fraud, and enable you to identify it more quickly should it occur.

Take Steps to Protect Demographic, Membership and Payment Information

Protecting your nonprofit from fraud is not limited to protecting its cash and other physical assets. Safeguarding the records of your nonprofit members, staff, board, volunteers, donors, and service beneficiaries is also critical to reducing fraud.

Use anti-virus software, two-factor authentication and strong passwords to help protect information in nonprofit databases. Use locks and other substantial barriers as well as limit and record access to any physical records that your organisation keeps. Ensure that your NFP’s members understand how to use email. It is also necessary to confirm that your NFP has a formal policy in place that states and controls the types of information that can be transmitted by members across your network and over the internet at large.

Job Rotation, Screening and Anti-Fraud Training Can Help Deter Fraud

Organisations that design and implement anti-fraud programs and policies for every level of their organisation typically have more success in deterring these types of crimes. NFPs should thoroughly screen potential staff and volunteers before hiring them to uncover potential threats. Cross training and regular job rotation can help organisations catch fraud and other theft more quickly should it occur. Offering anti-fraud training to board members, administrative staff, managers, and other leaders within the NFP can help everyone to be on the same page and know what to look for to catch fraud more quickly so that significant losses have less time to occur.