Every nonprofit manager knows that fraud is a bad thing but too many operate under the belief that it can never happen to them. It’s that attitude that can lead to fraud occurring in the first place.
Managers can’t eliminate human weakness, but they can be vigilant in
preventing fraud or, if necessary, dealing with it right away. Further,
prevention can be helped in part by awareness throughout the
During the recent AICPA Not-for-Profit Industry Conference, Mitchell
Lewis, David McRoberts and William Mellon shared several statistics
regarding fraud, taken from the Association of Fraud Examiners 2012
Global Fraud Survey (which includes for-profits). Get ready to be
- Asset misappropriation schemes made up 87 percent of reported cases.
- The typical organization loses 5 percent to fraud each year.
- Reported frauds last approximately 18 months before detection.
- Some 77 percent of frauds were committed by individuals in one of
the following six departments: accounting, operations, sales,
executive/upper management, customer service, purchasing.
- Owners/executives and managers committed median losses at $573,000 and $180,000, respectively.
- The median loss caused by occupational fraud was $140,000.
- Median losses for nonprofits totaled $100,000.
- Approximately 85 percent of fraudsters are first-time offenders.
- Approximately 54 percent of fraudsters were between the ages of 31 and 45.
Update: Missed today’s webinar? Not to worry, you can view the complete slides and recording on our online library.
Over the last year or so, Intacct Corporation has worked with us on a number of informative webinars on the current world of nonprofit financials. They are joining us for another session on one of the more popular accounting programs available: QuickBooks.
“Has Your Nonprofit Outgrown QuickBooks? Taking Financial Management to the Next Level” is the latest in our series of free webinars with Intacct. Many organizations use QuickBooks because it’s easy, well known, and it simply works. But as your organization moves beyond the entry level, QuickBooks may hold you back — slowing growth and draining productivity. Change is hard but this webinar will help you start the transition of moving to a new accounting system.
Here’s what you will be learning during this webinar with speaker Joan Benson, Sr. Product Manager, Nonprofit Industry at Intacct:
- Why you need a true nonprofit accounting solution.
- Five signs your organization has outgrown its small business accounting solution.
- How to evaluate the true costs of staying with QuickBooks (hint: it’s not just the software).
- How the cloud makes it easy to move to a true fund accounting system.
Unless someone develops a way to stop humans from having feelings of greed, nonprofit leaders are going to have to continue to be vigilant about fraud prevention. At a recent AICPA Not-for-Profit Industry Conference, the best ways to do this were discussed.
At the conference, Mitchell Lewis, David McRoberts and William Mellon said that while it is nearly impossible to stop fraud, there are ways to reduce the chances it will happen to you and to limit the damages if it does. They said that one of the main causes of fraud is a work environment where lack of oversight and too much trust are rampant.
With that in mind, Lewis, McRoberts, and Mellon offered five suggestions for organizations to practice:
- Fraud governance structure, including tone at the top, a zero tolerance
policy, documented fraud policy statement and a code of ethical
- Regular education and training.
- A fraud tip line.
- Completion of a fraud assessment to identify fraud exposures and related events that require mitigation.
- An investigation and response reporting process.
- Vendor bidding process;
- Completion of background and reference checks;
- Dual signatures and levels of approval;
- Segregation of duties;
- Mandatory vacations; and,
- Internal audits and use of Computer Assisted Audit Techniques (CAATs).
A new report from the Rollins Philanthropy & Nonprofit Leadership Center revealed that while budgets have increased at nonprofits in Central Florida, female executives are still being underpaid when compared to their male counterparts.
“Almost two thirds of nonprofits reported increased budgets and salaries, especially in the development director field,” said Linnane. “There was also a higher turnover rate for employees seeking new jobs and considering retirement. These factors indicate a recovering economy, which we haven’t seen in the reports for some time.”
The average pay for all CEOs/Executive Directors in the sample was $99,868 per year; for men, the average annual CEO/Executive Director pay was $115,731; for women, the average annual CEO/Executive Director pay was $87,693. While a majority (57 percent) of those surveyed was women, a greater number of men are found in the CEO/Executive Director positions of the largest organizations, which tend to pay higher wages.
You can view the full report by visiting Rollins Philanthtopy’s website.
Want more data on nonprofit salary and benefits? Purchase The NonProfit Times‘ 2012 Salary and Benefits Reports, and don’t forget to participate in our 2013 Salary Survey (deadline for completion in July 26th).
Pension liabilities will be continue to be a burden for nonprofit hospitals rating service, Standard and Poor’s (S&P), reported Monday.
While there are other factors contributing to the financial problems of the sector, large pension funding demands are the biggest factor according to a report in Reuters. S&P credit analyst Liz Sweeney said in a statement that the promises of these retirement benefits could be a “drag” on nonprofit hospitals for several years despite improvements in the investments used to fund retirement services.
“Low discount rates have hampered the improvement in funding levels despite a rebound in asset values during the past two years,” said Sweeney.
Retirement benefits are just one of the many challenges nonprofit hospitals are facing. S&P noted that as pension gaps continue to grow in state and local governments, employers are putting more money into healthcare systems that have redesigned pensions, which could leave less funds for other projects.
“We believe that health systems will continue to implement plan changes to seek the next level of cost savings within the context of organization-wide expense reduction measures,” S&P reported.
Changes from the Affordable Care Act, increasing stress on Medicaid and Medicare, and increased healthcare demands in general, are also increasing the financial difficulties for nonprofit hospitals across the country.
You can read the full story in Reuters.
The founder and former CEO of a Naperville, Ill.-based nonprofit has allegedly fled the country amid allegations he stole nearly $200,000 from the organization for a film company he founded.
Robert Geniesse founded Our Children’s Homestead, a nonprofit foster-care and adoption agency, and was CEO until the board of directors fired him in March 2011, according to a report in The Daily Herald. He was fired under suspicion that he was embezzling from the organization, and a criminal investigation was soon launched.
Geniesse was formerly charged this month with funneling over $200,000 from the organization to his film company, Reverse Momentum Films. Four days before the charges were filed, however, he fled to Hamburg, Germany, according to the FBI. It was also alleged that his wife, who runs the film company along with her husband, went to Germany one month before the charges were issued. Howe is not charged with any wrongdoing in the case.
Along with using the funds for production of documentary films, Geniesse allegedly used the agency credit card for hotel rooms, rental cars, and other expenses during filming in Kenya and the Philippines. Reverse Momentum Films produced at least one picture in 2009, “I Am You,” a documentary about poverty in the Philippines.
Despite the alleged theft, Our Children’s Homestead remains in a good financial state. Kurt Freidenauer, who replaced Geniesse as CEO last year, told The Herald that the organization has been able to maintain its daily operations. He gave credit to the board for firing Geniesse before any more damage could be done.
Should he be located, the FBI will seek to expedite Geniesse back to Illinois, where, if convicted, he faces a $100,000 fine and up to 15 years in prison.
You can read the full story in The Daily Herald.
The sister publication of The NonProfit Times, Exempt Magazine, is the perfect publication for those in the sector whose forte is finance. The magazine is released quarterly, and the time has now arrived for the release of the latest edition.
The Fall 2012 issue of Exempt tackles a number of topics, from inflation to social media. Let’s take a look at some of the content you can expect to find within the pages:
- Hedging Against Inflation by Diversifying Investment Income: Some of the nation’s largest nonprofits are complex businesses,
generating income from donations but also via fundraising events,
program service revenue or membership fees, as well as investment
- Managing Risk In The New Normal: As you prepare to flip the page on your old-fashioned
paper wall calendar and toast the New Year, are you thinking about
risk? What adventures await your nonprofit in 2013? What risks will pay
dividends, and which will you be regretting at this time next year?
- Finance And Fundraising: Are you are asking this question about social media: “How do we know
this investment of staff time in social media will pay off?” If you are
getting answers from staff like this: “We have 10,000 fans on Facebook,”
hit the pause button and work on defining what success means. (Also check out this chart on social media metrics).
A new bill pending in the Illinois State Senate would require publicly-funded nonprofits to expose the pay their executives receive from private management companies.
The bill would accomplish this by closing a loophole that currently allows organizations to hide this data, according to a report in The Chicago Tribune. State Rep. Greg Harris (D-Chicago) filed the legislation after reading a series of reports in the Tribune that revealed that the nonprofit executive pay at 18 state-funded organizations rose at double the rate of the private sector in 2009 and 2010.
The report in question showed that nonprofits were able to hide their pay data by paying salaries through for-profit management companies they formed. The proposed legislation would amend Illinois’s procurement code to specify that organizations would also need to reveal what executives are paid even if those salaries came through a private company.
This is the latest step in a series of efforts by the state to bring greater transparency to publicly-funded groups. In July, the Illinois Department of Human Services, which funds many organizations in the state, started requiring all tax-exempt organizations that received $250,000 or more to release the pay data for all employees, including those paid through private companies. This requirement will extend to any nonprofit receiving $250,000 or more in DHS funding.
Harris’s bill will bring similar requirements to many organizations in Illinois, regardless of which agency is funding them. During Fiscal Year 2011, more than $9.8 billion was distributed to almost 6,000 nonprofits throughout the state.
You can read the full report in The Chicago Tribune.
There are few states that have as much diversity in the nonprofit sector as New York. From famous organizations such as Charity: Water in New York City, to the government-related nonprofits of the Capital region, there are plenty of opportunities in the Empire State.
That’s why, for the 2012 Nonprofit Salary and Benefits Reports, The NonProfit Times released a dedicated report for New York nonprofits.
The 2012 Nonprofit Organizations New York State Salary and Benefits Report is the ideal guide for managers who want to make sure they are offering compensation in line with competitors. It stands to reason that a large charity in Manhattan will offer vastly different salaries and benefits to workers than in smaller regions of the state, which is why the report offers a baseline on salary and benefits so you will be in line with your peers.
As any successful nonprofit manager knows, salary is just half of the picture when it comes to compensation, especially with top-of-the-line jobs. That’s why the New York Salary and Benefit Report lists the top executive perks given in the state. Additional vacation days and a car or car allowance were most common among New York’s nonprofits, with more than half offering these perks to their top executives. It should be no surprise, then, that these positions have some of the lowest turnover rates of those surveyed for the report.
Other information included in the NY Salary and Benefits Report include:
- Annual Salary Increases (executive and non-executive);
- Base Salary and Total Cash Compensation data with percentile rankings for each position;
- Total compensation costs as a percentage of operating expenses;
- Employee profile data: number of full/part time; exempt vs. nonexempt;
- Retirement Plans (maximum contributions, eligibility, plan offerings, participation rates);
- Executive Employment Agreements (organizations offering, terms and conditions);
- Part Time Employee Benefit Offerings;
- Overtime Practices – exempt vs. non-exempt staff;
- Flexible Spending Accounts (offerings, maximum contribution percentile rankings); and,
- General Benefit Offering (covers 34 unique benefit programs).
This report can be purchased, along with the four other Salary Reports, on The NonProfit Times‘ online store.
The NonProfit Times, the leading business publication for nonprofit management, has released the 2012 editions of its annual Nonprofit Salary and Benefits Reports. In partnership with Bluewater Nonprofit Solutions, these five reports will give managers the most up-to-date information on current trends in nonprofit salaries and benefits so they can properly fill out their IRS Form 990s.
This year brings the introduction of a new report to the standard four that were available in previous years: The 2012 Nonprofit Organizations New York State Salary and Benefits Report. All of NPT’s reports are based on responses from around the United States, but this is the publication’s first report to collect information based on a specific state. The New York Salary and Benefits Report contains information on mid-level salary information, complete benefits coverage, and key benchmarking information, including base salary and total cash compensation data with percentile rankings for each position.
The other reports released by NPT today are:
- 2012 Nonprofit Organizations Salary and Benefits Report: The information in this report will give you the salary range for nearly 252 positions in the nonprofit sector.
- 2012 Nonprofit Organizations Salary Report: This is useful for organizations that already have a handle on their benefits packages, but need information to create competitive salary structures.
- 2012 Nonprofit Organizations Benefits Report: Similar to the report above, this is the one to purchase if your nonprofit only needs help with creating competitive benefits packages for its employees.
- 2012 Nonprofit Organizations Top Executive Positions and Special Perks Report: Nonprofit executive compensation is so important to understand thoroughly. In order to attract the best people to be a part of a nonprofit organization, a very competitive environment, you need to make sure that you offer appealing compensation packages for hiring individuals who you wish to play an important role in your organization.
All five of the reports are available for purchase immediately on The NonProfit Times’ online store. Purchase one, or more, today so that your organization can attract the best and brightest employees, and stay on top of those Form 990s.