Church Fraud Is Estimated To Increase To $110 Million Dollars A DayNonprofit
Many churchgoers may find it difficult to believe that churches are often the victims of embezzlement and fraud. One study from Brotherhood Mutual Insurance, found that financial fraud in Christian churches was expected to reach $100 billion mark by 2025. This means that the amount of money lost to fraud exceeds the amount that churches donate to charitable causes.
Christian churches are not the only targets of thieves. Fraud also occurs in synagogues, mosques and other religious establishments. If you are a member of a church board, it is important that you recognize the red flags that can indicate that something might be amiss and institute sound church accounting practices to prevent fraud from occurring. Churches may also benefit by switching their payment methods to church debit cards rather than allowing access to church accounts or checks.
What is church fraud?
Church fraud happens when someone in a position of trust in a church or other religious organization diverts funds from the church to himself or herself. Fraud and embezzlement schemes in churches have involved religious school cooks, pastors, people entrusted with counting the money collected in offering plates, priests and others in positions of responsibility.
A study that was reported by Forbes magazine found that 95 percent of the incidents of church fraud go unreported to authorities. Brotherhood Mutual Insurance estimates that fraud in churches is expected to reach $100 billion by 2025, demonstrating a clear need for churches to take steps to prevent themselves from becoming the victims of fraud.
How can churches prevent church fraud from happening to them?
One reason that churches are common targets of fraud is that many simply do not have good church accounting practices in place. Issues such as allowing one person like the pastor to have control over the church’s bank accounts can lead to temptation and theft.
Churches should do several things to help to prevent fraud. They should always have teams of two people collect and count the offerings. Church members should be encouraged to place their tithings in envelopes with their personal information written on the outside of the envelopes.
Some churches have adopted high-tech tithing practices in which people use their debit cards to donate to the churches online. When people endorse checks to the church, they should stamp “for deposit only” on the backs. This can help to prevent the checks from being diverted elsewhere. Finally, churches might want to use church debit cards instead of checks or credit cards.
What are the telltale signs of fraud?
Several red flags can indicate a high risk of fraud. If one person is in charge of everything, issues can arise. Having one person count the money in the offering plate is also problematic. Not reconciling the books at least monthly can lead to ongoing problems.
In many cases, people who are committing church fraud will have obvious changes in their lifestyles. For example, if someone who is in a position of authority in a church suddenly starts going on extravagant vacations, driving luxury cars and engaging in other activities for which there is no explanation, experts say it is may be a sign of potential fraud. Discrepancies in the accounts and books are also indicators that fraud may be occurring.
How can you report fraud?
If you believe that fraud has occurred in your church, you should report your suspicions to law enforcement authorities. You might first want to get help from a certified fraud examiner to investigate what has occurred. The federal government has a listing of agencies that handle fraud cases of all types.
Preventing church fraud from happening is vital to the mission of churches. By switching your church’s spending and expense management tracking to church debit cards from a company like Bento for Business, you may be able to help stop church fraud. These cards allow your church board to make deposits to a central account and then fund each card that is given to different people who need access to funds from the account.
You are able to restrict the amount of money that can be spent on each card as well as what types of purchases can be made. For example, a person who must pay the utilities could have a card that can only be used to pay the utility companies. If any other transactions are attempted, your board would be able to see the attempts and act accordingly. To learn more about how your church can prevent fraud, contact Bento for Business today by calling 866.220.8455 or sign up for our free 60 day trial.