Member Article

Embezzlement and fraud within nonprofit organizations has reached epidemic proportions. According to the Association of Certified Fraud Examiner’s (2020) Global Study which contains an analysis of 2,504 cases of occupational fraud that were investigated between January 2018 and September 2019, 70 percent of frauds occurred in nonprofit organizations. The study points out that nonprofit organizations only reported 9 percent of fraud cases and suffered the smallest median loss of $75,000 and an average loss of $639,000; however, as the study points out, many nonprofits have limited financial resources to begin with, so a loss of these amounts can be particularly devastating to these entities.  There are a multitude of factors that make nonprofit organizations susceptible to fraud including a lack of internal oversight and controls, inadequate training, high turnover with low employee investment, and poor technological resources. Nonprofit organizations often have limited operating budgets with more money allocated to core programming than to internal audit and compliance departments.

To continue reading Harry Sandick and Justin Zaremby's chapter in Elgar's Encyclopedia of Nonprofit Management, Leadership, and Governance, please click here (a subscription may be required to view).