1 in 3 Churches: Is Yours Ripe for Financial Fraud?

Just yesterday, I received an email from my “pastor.” “Pastor” is in quotes because the email went something like this (which may or may not be an exact replication):
 
Psssst. Can you keep a secret? I need you to send me ten $50 Amazon gift cards. I can’t say for who – but it’s for someone who has cancer. I cannot be reached by phone or text, so please don’t try. However, do respond to this email – even though it’s not one I usually use – with the gift cards. God will bless you. I know I can count on you. Thank you, Your Favorite Pastor
 
Ugh. Obviously, you would immediately hit the delete key. However, if it’s sent to 100 people, these icky fraudsters need just one who says, “Wow! I want to help someone with cancer. If my pastor is asking, it must be legit.” Yep, there's one more successful scam in the books.
 
But how about in the hallowed halls of your church? Do you have guardrails in place to ensure that your congregation isn’t getting ripped off from within?
 
Of course, this would never happen in your church. Everyone is so nice. Everyone is super trustworthy. You just have a good feeling about everyone.
 
In a recent article Protecting the Financial Integrity of Your Church, Rollie Dimos reported, “…according to Church Law & Tax, nearly 1/3 of U.S. churches have experienced some form of financial misconduct, such as fraud or embezzlement.”
 
Read that again, please.
 
Nearly 1/3 of U.S. churches have experienced some form of financial misconduct.
 
Yikes. Do I have your attention?
 
I quote very little from President Ronald Reagan, but here’s one axiom he popularized. It was great for rearing a teenager and works perfectly for church finances too:
 
Trust, but verify.
 
In his article, Dimos provides practical ways to protect your congregation’s sacred giving. In essence, how to “trust, but verify.”
 
- Segregation of duties:
“The person who counts offerings should not record them or reconcile the bank deposit. The bookkeeper who prepares checks should not sign them or reconcile accounts.”
 
- Offering collection safeguards
“Require at least two unrelated people to count every offering (rotate teams weekly to prevent collusion).”
 
- Bank reconciliation procedures
“Reconcile every account monthly by someone who does not handle cash or write checks (ideally a board member or volunteer).”
 
- Expense approval workflows
“Require written approval before purchases. Use a three-way match: approved purchase request, proof of receipt/service, and valid invoice. Never sign blank checks.”
 
- Physical and digital security
“Lock up cash and blank checks or use your bank’s secure night-drop boxes. For online giving, banking, and financial software, require multi-factor authentication.”
 
Dimos also has some tips for the small church, too, that you can read here.
 
These are just the highlights. Please read the entire article. Share it with your Finance Committee.
 
Bottom line:
Do you have procedures in place to help your congregation avoid fraud?
If so, are you following those procedures?
 
Your financial resources are a (literal) gift from God. Don’t let them get misused, simply because you want to believe everyone is on the up-and-up.
 
One in three churches would tell you otherwise. Don’t make the same mistake.
 
Two previous posts about avoiding financial fraud –
And How Do You Handle Money?
Best Practices for Your Church Offering
 
***For those of you in the Oregon-Idaho Annual Conference of the UMC, church audits were recently due. Filling out the GNW Financial Audit Program form will help ensure you have all the proper internal controls in place.
 
Photo credit: Lechenie-Narkomanii @pixabaycom

###Cesie Delve Scheuermann (pronounced “CC Delv Sherman,” yes, really) is a Stewardship Consultant for the OR-ID Annual Conference. She is also a Senior Ministry Strategist with Horizons Stewardship – helping with capital campaigns and encouraging more generosity. For 25 years, while working as a volunteer and part-time consultant, she has helped raise millions of dollars for numerous churches and non-profit organizations. Have you always wanted to respond to that spam email? If you do...here’s what can happens. It’s a hilarious TED Talk.
 
You can reach Cesie at inspiringgenerosity@gmail.com, at CesieScheuermann.com, or at cesieds@horizons.net. Want to schedule a meeting? She’s got you covered!
 
Schedule a meeting now.
 
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