It’s the last thing a pastor expects, yet it happens – probably more often than you might think. It rarely happens overnight, but normally occurs over a period of years. The amount starts small and then seems to accumulate rapidly.
While we’d all prefer to trust those who handle church finances, that’s not a risk we can afford to take. We need to have safeguards to not only protect the church but also protect the reputation of those who handle church finances.
Why would someone steal from the church?
There are perhaps a variety of reasons but most often, one or more of the following occurs.
- Lack of Internal Controls – This is the one area that churches can control but if ignored, it creates opportunity.
- Financial Pressure – Something has happened in their life or their family’s life where money is needed.
- Rationalization – This is the most difficult to understand and the reasons may be varied but the individual may rationalize they are only borrowing it for a short period of time with the thought of paying it back (which they rarely do) or perhaps they think they aren’t paid enough and so deserve the money.
Common Misconceptions
- It Will Never Happen Here – In a recent survey by Church Law & Tax, they cited that two-thirds of survey respondents said they believed the problem is unlikely or “will never” happen in their churches. Ironically, among the churches that actually experienced some type of fraud, half of those were of the former opinion that it would never happen there.
- We Are A Small Church – Out of a perceived level of trust, many small churches use one person to handle all their finances. Unfortunately, with a lack of oversight, that presents opportunity and I can testify by personal experience, these are where I’ve seen the most claims. And despite the smaller membership, the eventual monetary loss was staggering.
Lessons To Be Learned
- Develop A Financial Policy – The first step to putting financial safeguards into place is to develop and adhere to a policy that identifies how funds are handled, counted, deposited, reported, and audits. The policy should address procedures for handling funds from the time collections are taken until money is disbursed, including online giving and banking processes.
- Segregate Duties – When is it easiest to steal something? When no one is looking! Therefore, separate the duties of receiving funds, disbursing funds, writing checks, signing checks, and reconciling bank accounts.
- Request An Annual Audit – While an outside audit by a CPA can be costly, it is a wise investment in making sure the church’s finances are handled properly. By bringing in someone not affiliated with the church, you are able to get an unbiased viewpoint. This also serves as a deterrent as people are less likely to attempt to defraud the church if they know they might get caught in an audit.
Church fraud/embezzlement prevention is about protecting cash and property. It’s also about the protection of the employees and volunteers who handle the church’s finances. And ultimately, it’s about the protection of the Lord’s name and the unimpeded furtherance of His work.
