Fundraising is hard work. No doubt about it. It involves the time and effort of volunteers who are committed to your organization. Every dollar your organization earns through fundraising needs to be accounted for and used wisely.
The following are from current news items from around the United States.
A former treasurer for a high school sports booster club stole $48,000 from the group's
bank account to pay her personal bills and buy a house.
A treasurer of a high school wrestling booster club stole $12,000.
A school secretary embezzled more than $480,000 from the student activity fund.
A fraternity was embezzled by an alumni who was supposed to be in charge of paying the rent of the frat house to the university.
These stories may be shocking but they are not at all uncommon. It is a fact that there are people who do steal and embezzle the funds raised by organizations such as PTO's, sports teams, churches, as well as well-known national charities. Usually people are surprised that someone they thought they knew so well could do such a thing.
When something like this happens to small nonprofits or clubs it can have a devastating effect on the organization and the community for years. The money will have to be raised again which will be difficult if donors have lost faith in your organization.
There are checks and balances that can be put in place to reduce the chance of this happening to your nonprofit organization.
These are some of the things that can be done to help avoid the possibility of funds embezzlement:
Rotate the job of treasurer on a yearly basis - If the same person is in charge of the money year after year it becomes too easy to hide bad accounting procedures.
Checks - Two signatures should be required on each check. Yes, this may slow down the process of check writing and it may be difficult to find two volunteers to do this, but it needs to be done.
Cash - Cash should always be put in a locked safe and deposited in the bank the next business day. Money should always be counted by two people who both sign a receipt confirming the amount of money received.
Disbursements - Cash disbursements should always have a paper trail of invoices and receipts.
Financial Documents - At each board meeting the original bank statements should be presented and filed by the secretary and treasurer.
Yearly Audits - Financial audits should be done by a CPA on a yearly basis.
Background Checks - Require that every board member has a background check from your local police department.
Insurance - Buy an insurance policy that protects you in case of embezzlement. Make sure you follow the proper procedures in money handling according to the policy.
It is up to the board of directors of the organization to ensure that the proper accounting procedures are followed. Do not let your nonprofit organization become a victim of embezzlement or fraud.
Article by Amy Passmore of DIY Fundraising.
Are you looking for ideas on how to raise money for your school, charity or nonprofit organization? Visit http://www.diyfundraising.com for more great tips and resources from an experienced fundraiser.
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