It seems that the news is peppered with stories about small, local charity agencies that are falling prey to fraud by trusted volunteers. Church groups, youth sports clubs, elderly service organizations—they can all be victims of crimes like theft, misappropriation of funds and money laundering. Whether the thief takes money, equipment or other needed goods, nonprofits are often ill-equipped to carry the loss and rebound. Many go under as a result of financial misconduct.

Back in the 1950s, a famous criminologist developed the “Fraud Triangle” theory. It outlines the three key elements at play when otherwise law-abiding volunteers succumb to temptation and engage in fraud: opportunity, motivation and rationalization. For some, the motivation is debt. For others, they rationalize that the organization doesn’t need the money, and a small amount won’t be missed. Still other volunteers may need money to pay for their own or a loved one’s drug problems.

Since it’s clear that even those in positions of great trust will turn to fraud, non profit organizations must take precautions to prevent volunteers from having the opportunity to do so.

Here are some tips to control opportunity:

• Establish a system of control to deter and detect fraud. Never allow just one person access to checking accounts, books and financial records. Require double signatures on all checks over a given amount, and have the books audited by a professional on a regular basis. Don’t have the same people who collect money to also deposit it.
• Promote openness. Thieves thrive in secret, closed-off, non-communicative environments. Promote open communication and encourage everyone to report any suspicious behavior. It’s not necessary to be paranoid, but it is best to be proactive to protect the goodwill of the organization, and to ensure its stability and ability to fulfill its mission.
• Have a zero-tolerance policy. Let everyone know that any suspected fraud will be investigated, not swept under the rug.

Tags: screening volunteers, Volunteer Best Practices

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