To most of us, stealing money from a charity is unthinkable. Even so, embezzlement from nonprofit organizations is a serious problem. The Chronicle of Philanthropy reports that according to a 2007 study, 13% of the donations collected by nonprofits each year are lost to fraud. Further, the Washington Post reported that in 2013, more than 1,000 non-profits reported losses of $250,000 or more as the result of embezzlement, theft, misappropriation of funds, or investment fraud.
Losing that kind of money would sink–or at least seriously damage–a lot of organizations. Worse yet, the organization can be hurt even after the money is lost. Embezzlement or misappropriation can also discourage donors from supporting the organization, making it even more difficult to recover.
And worse yet, I suspect that smaller organizations are actually at greater risk than large ones. Why? Mostly, because large organizations are more likely to have controls in place. Also, I think there’s more of an expectation that a large organization will have and enforce those controls. Continue reading