Embezzlement? Can’t happen to you?
While I’m not often quoting former US President Ronald Reagan, I am rather fond of his “Trust, but verify” when it comes to nonprofit financial oversight.
Last week‘s news brought us two cases of embezzlement from nonprofit coffers. The first was the theft of $1 million over eight years by the controller of the Mark Twain House in Hartford, Connecticut. The theft was noticed by a super vigilant bank employee who questioned the signature on a check. (Note to bank —give that employee a big thank you from all of us. Note to store checkout clerk—could you maybe look at the signatures on credit cards now and then.)
In the other incident, the board chair of the Manhattan Chamber of Commerce was implicated in misappropriating $2.3 million in funds from the Albert Ellis Institute, of which he was the President and Director of Administration.
How could this happen, you might be asking yourself?
To quote from an editorial in the Hartford Courant:
“The [Mark Twain House] case presents a hard-earned lesson for the Twain House and other nonprofits. It isn’t the kid driving the van who embezzles from a company; it’s almost always a trusted, well-placed employee. “
Both cases should make you jump now to evaluate the effectiveness of the internal controls at your organization.
While it’s not always possible to prevent theft from occurring, you can create controls that limit the damage and increase the chance of early detection — not the year or more in the two cases mentioned above.
The United Way of Central New Mexico has a free online Internal Controls Tool Kit to get you started.