Thou Shalt Not Steal: Churches Not Immune From Fraud
It would be easy to assume churches and other religious organizations have no problem with employee theft—trust levels tend to be much higher. Unfortunately, even those who work in places of worship can be tempted just like anyone else entrusted with large sums of money. In many ways, churches are often more vulnerable for a variety of reasons:
- People tend to trust each other more in situations where beliefs run contrary to dishonesty.
- Churches tend to have smaller staffs, resulting in one person controlling finances.
- Clergy and administrators—or many business owners, for that matter—are not taught to think about fraud risk, particularly regarding their own staff.
- Those responsible for day-to-day administration might be reluctant to ask for an audit or anything sending a message to the staff that says, “We don’t quite trust you.”
A quick Google search for “church embezzlement” reveals a number of stories that have deeply affected churches around the country. Just last month, a former church administrator was sentenced to 17 months in prison for embezzling $130,000 over nine years. In a separate case, a former bookkeeper at a Minneapolis-area church was accused of stealing more than $235,000 over seven years. These were not one-time incidents of bad judgment; they were carefully orchestrated multiyear frauds made possible because someone completely trusted these employees, which is generally the reason they go undetected for so long.
The schemes are often uncomplicated, and once discovered, are simply a matter of tallying up the damage and trying to figure out how to get they money back (without employee theft insurance, the odds of recovering funds are small). Common schemes include employees who write extra checks to themselves or use business funds to pay off personal credit card bills.
So what can a church do? The solutions are no different than those for any other business:
- Don’t let one person have too much control. I often tell clients not to tempt employees who may be going through a tough time.
- Have one person write checks and another person sign the checks.
- Add a volunteer to the process to provide some oversight, such as having a retired accountant reconcile the bank account.
- Ensure any cash collections are counted by two or three people at the same time.
Having checks and balances is not about mistrust or creating red tape. Done properly, they can enhance the flow of documentation, find unintentional errors and make the church a better place for everyone.