Nonprofit leaders rely on their talent to execute the organization's goals. Whether full- or part-time employees, freelancers or volunteers, the people at a nonprofit organization (NPO) make its mission a success. However, sometimes that trust is misplaced with seemingly valued contributors who end up defrauding the organization for financial gain.
The figures are clear. According to the Association of Certified Fraud Examiners' 2018 Report to the Nations, it is estimated that organizations — NPOs or not — lose 5% of their annual revenues to fraud. Small organizations (those with under 100 employees) lose almost twice as much per scheme as larger organizations. Also in to the report: internal control weaknesses are responsible for nearly half of all frauds.
Cyber fraud currently receives a lot of attention, with data breaches from outside the organization continuing to spike. However, NPOs need to keep their focus on internal fraud as a key part of their risk reduction strategy.
Fending off fraud from within
To help you protect your NPO, we have compiled the top five employee fraud schemes making their mark on NPOs, according to the Association of Certified Fraud Examiners. We also offer detailed tips to prevent each type of fraud.
While NPOs should explore prevention tips common to all organizations, they also need to go granular with their prevention strategy — combating NPO fraud with NPO solutions.