Tuesday, April 29, 2008

Report on Fraud in Nonprofits - A $40 Billion Problem?

The Nonprofit and Voluntary Quarterly recently published a report on fraud in nonprofits authored by Janet Greenlee (University of Dayton), Mary Fischer (University of Texas at Tyler), Teresa Gordon (University of Idaho), and Elizabeth Keating (Harvard Law School and the Hauser Center for Nonprofit Organizations).  The report begins by noting that if an Association of Certified Fraud Examiners (ACFE) estimate that all organizations lose an average of 6 percent of their revenue to fraud each year, the fraud loss in the nonprofit sector would be approximately $40 billion.  The report then analyzes 2004 data on actual fraud cases at nonprofits reported by ACFE members and involving almost $30 million in losses.  Based on this review, it concludes with a series of recommendations for how nonprofits can protect against fraud, including strengthening internal controls, creating a board audit committee, improving board quality and oversight generally, better vetting and education of employees, and providing an easy means for employees and others to confidentially report suspected fraud.

(hat tip: Alice Thomas)

LHM

http://lawprofessors.typepad.com/nonprofit/2008/04/report-on-fraud.html

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