Once a fraud has been detected it is not unusual to not be sure of the best approach to take because of the ramifications.

Often a decision is made not to report it to authorities and try to keep it quiet to avoid any adverse impact on the organisation.

This may relate to concerns about the reputation and the belief that fewer people will join the organisation or that  it could result in fewer donations being made.  If people don’t trust an organisation or believe it cannot safely and securely manage their resource,s then they are less likely to contribute or make donations to the organisation.

In addition, if the organisation receives grants from the government then they may be harder to obtain or may even be withdrawn in the future due to the fraud.  These are the reasons people use when they decide to try and keep it quiet.  But this also raises a dilemma.

It should be remembered that any fraud even if relatively small is still theft, illegal and laws have been broken.  Even if it is a relatively small amount and a decision is made not to pursue it this could even lead to greater fraud in the future.

For example, if the employee who has committed the fraud is dismissed and moves to another position then they might commit fraud at the next organisation they are employed at in the belief that they can get away with it.  This highlights the importance of not ignoring the fraud, but ensuring it is properly followed up and addressed.

Furthermore, the article titled:  After Nonprofit Fraud, Mere Restitution is Insufficient  raises the argument that any organisation that has experienced fraud has an obligation to report it as there is not only a responsibility to their donors but also to the rest of the sector.

This is a very interesting article that provides both a great case study and valuable insights in relation to an organisation that experienced fraud.  Take a few moments to read it.