A strong mission is no defense against bad actors, as many churches have learned the hard way. In a recent article, an organization committed to financial accountability in churches outlined a number of real-life examples to hammer home the impact of financial malfeasance in religious organizations.
There was the story of the pastor who created one set of books to show his board and another that reflected the money he’d embezzled from the church. Then there was the church usher caught on camera “palming” offering money, the church bookkeeper who wrote unauthorized checks to herself over two years, and the ministry accountant who bought himself expensive personal items with ministry funds.
It’s hard to protect against every possible instance of fraud or theft, but there are systems churches can put into place to reduce the opportunities for this bad behavior.
Deposit Management Services
Many instances of fraud or theft within churches are crimes of opportunity: The church has set aside a pool of cash reserves for rainy days, emergencies or just paying the bills. Without an active purpose or a dedicated use, that money can become vulnerable. It’s quite literally a sitting duck.Deposit management services can remove the temptation of fraud or embezzlement by finding a home for those excess funds that preserves liquidity, secures the protection of FDIC insurance and generates the most competitive returns. This is done by spreading those excess religious funds around to a network of different financial institutions across the country. The FDIC will only insure up to $250,000 in a single account, but by spreading your money around, you can keep your deposits in any one financial institution beneath that threshold, thereby securing FDIC coverage.
In addition, by spreading church deposits around to different financial institutions, you’re able to take advantage of the most competitive returns across the country, while keeping your religious funds liquid. You still have access to the money when you need it, but it’s not sitting idle and vulnerable.
Like all ventures, churches occasionally deal with outside vendors, and that presents another opportunity for fraud and theft. Any time an outside vendor is used, there is an exchange of funds. Those payments are documented on invoices and other materials to ensure the church got what it paid for, and that the vendor was, in fact, paid. But documents can be forged, and vendors can even be part of the scam. The best way to reduce the risk in this process is to minimize the number of people who have access to make a fraudulent payment.
It’s unreasonable to consider doing away with all outside vendors. It is reasonable, however, to consider managing vendor payments through a single third party. That reduces the number of touchpoints, streamlines disbursements to vendors and provides transparent reporting to ensure your money goes where it should.
As a side bonus, a vendor payment solution helps to ensure vendors are paid on time and accurately. It’s no secret that making life easy for your vendors makes can make life easier for you. If you want to learn more about how deposit management and vendor payment processing can work for your religious organization, contact one of our associates today.