Nearly 40 percent of financial management teams lack annual fraud prevention procedures, checklists and similar reviews, according to results of the new Nonprofit Financial Management Survey from the Evangelical Council for Financial Accountability (ECFA).
The survey results suggest that the lack of adequate attention to fraud prevention might correlate with inadequate staffing. Of the 383 organizations represented in the survey, only 10 percent of chief financial officers devote 100 percent of their time to their specific role and 34 percent of respondents said their staff is stretched too thin when asked about the officer’s single greatest need.
“Sixty-five percent of those surveyed agreed that because of the recession (and other factors) they are definitely learning to do more with less. But exemplar organizations — only 7 percent of those surveyed — are the ones that keep annual fraud prevention, financial reporting and impact measurement as high priorities,” said ECFA President Dan Busby.
The survey also provides insight on other distinguishing characteristics found in the most effective nonprofits, such as: They are fanatical about process. The survey found there are three clear indicators of effective process: strong controls, clear separation of duties and an annual fraud prevention audit; They have financially literate leaders. The survey found that three key groups were much more likely to be able to understand financial reports. Exceptional organizations have directors, finance committees and senior teams with an in-depth understanding of financial reports; and, they offer competitive compensation.
The survey results indicated that effective ministries offer compensation and benefits competitive with the market — in line with other local nonprofit ministries.