The Threat Within

Don’t let your ministry be an easy target for embezzlement

In the business world, embezzlement is the most common financial crime. Unfortunately, it’s also a frequent crime against churches and nonprofit ministries. Unlike other crimes, embezzlement is perpetrated by a trusted person from within. Though most leaders can’t imagine one of their own committing such an act, these types of crimes are common—and costly—enough to warrant the following preventive measures.

Put It in Writing

  • Develop a written policy governing the handling of ministry finances. This should spell out procedures for making deposits and withdrawals, accessing financial records, and conducting other financial business. In addition, written position descriptions for those involved can eliminate confusion over who has access to certain financial documents and who’s authorized to perform certain financial functions.


  • Document all financial transactions clearly and immediately. Record deposits, withdrawals, loan payments, payroll and any other financial transactions. Keep these records (and duplicates, if necessary) in a safe place.


  • Implement a program for documenting suspicious financial incidents. When you make it easy and safe for employees and volunteers to report suspicious financial activity, they’ll be more likely to come forward with helpful information.


  • Develop a program for handling church finances in which the receipt, deposit, distribution and documentation of church money is carried out by different people. Require dual signatures for transactions such as withdrawals or for endorsing and cashing church checks for more than a certain dollar amount. If control over financial operations is divided among several people, it will be extremely difficult for discrepancies to go undetected.

    Watch Over Your Offerings
    Tithes and offerings represent the greatest internal threat of loss. And because significant portions of offerings are made in cash and are usually collected and counted by volunteers, the misuse or misappropriation of cash offerings is one of the easier crimes to commit.

    To protect your church’s offerings, follow these steps:


  • Ask congregants to use envelopes preprinted with their names and addresses. This will make it harder to discern what portion of the offering is cash and what portion is checks.

    l Always have at least two people present when counting the offering. Use longtime church members who’ve established a reputation of being trustworthy. Develop a list of such people, and periodically rotate those on the list when offerings are counted. Also, avoid counting the offering behind closed doors.


  • Stamp checks “For Deposit Only” when endorsing them to make it more difficult for the money to be redirected anywhere except to your church’s account. Also, using colored ink, rather than black ink, on rubber stamp images makes it harder to use a copy machine to forge them.

    Taking steps to prevent internal crime is just as important as guarding against outside threats. Following these guidelines will help you reduce the chance of being victimized from within and help you avoid the high physical, emotional and monetary costs it can bring.


    Matthew G. Hirschy, CPA, is the vice president of finance for Brotherhood Mutual Insurance Company. For free resources, visit brotherhoodmutual.com.


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