The busy year-end giving season, coupled with holiday absences, can leave your nonprofit vulnerable to fraud. This risk increases if you rely on more volunteers during this time, host special fundraising events, or plan to distribute gift cards to staff and clients. Here’s how to safeguard your organization.
Handle Cash Carefully
Nonprofits often foster a culture of trust due to the passion of their staff and volunteers. However, this can make them susceptible to cash-related fraud. To mitigate risks, ensure that a manager supervises anyone handling cash donations and that detailed records are kept.
If you’re hosting an event, consider pre-registering participants or preselling tickets to minimize cash handling. Enable credit card payments and, if cash is accepted, assign these duties to vetted employees or trusted board members rather than unsupervised volunteers.
Maintain Segregation of Duties
Amid the hustle of processing donations and year-end tasks, internal controls like segregating accounting duties are essential. Involve multiple employees in managing payables and receivables to minimize fraud risk. For example, the staffer who placed an order should review the corresponding invoice, a separate employee should handle payments, and another person or external advisor should regularly review financial records. If key staff members are on vacation, seek assistance from executives or board members rather than bypassing controls. Avoid cutting corners or suspending checks and balances due to short staffing.
Be Wary of Gift Card Fraud
Gift cards can be a target for holiday fraud. Scammers may tamper with cards on display racks, stealing bar codes, PINs, and activation codes. To prevent this, purchase gift cards from stores with robust security measures, such as surveillance cameras on gift card displays. Inspect cards for any signs of tampering and promptly distribute them to recipients, encouraging early use.
Preserve the Holiday Spirit
The period between Thanksgiving and New Year’s Day is crucial for fundraising. Don’t let fraud jeopardize your hard work or dampen your holiday cheer. Reach out to us for assistance in establishing or enhancing your internal controls to keep your nonprofit secure.
