The results of nonprofit fraud can be so devastating that nonprofit leaders live in constant dread of it and most utilize some kind of anti-fraud measures.
Being aware of where the damage occurs, or who commits the most costly damage can be helpful in preventing fraud or minimizing the damage it causes. The higher an individual is in the hierarchy, the less likely that person is to commit fraud, but when a highly placed executive does go astray, it’s usually for big money.
That was one of the messages being driven home during the Summit for New Risk Champions by Melanie Lockwood Herman of the Nonprofit Risk Management Center, citing information from the Association of Certified Fraud Examiners (ACFE). She offered the following facts to make nonprofit managers aware of the types of risks that exist as well as of the people who commit fraud:
- Perpetrators with higher levels of authority cause much larger losses.
- The median loss among frauds committed by executives was $600,000.
- The median loss caused by managers was $85,000.
- The median loss caused by employees was $65,000.
- Most occupational fraudsters (those who defraud their employers or use them to commit fraud) are first-time offenders with clean employment histories.
- Roughly 89 percent had never been charged or convicted of a fraud-related offense.
- Roughly 84 percent had never been punished or terminated by an employer for fraud-related conduct.