By Jack Stubbs, Chair of Council on Finance and Administration
How common is embezzlement in our churches? Personally, I experienced the problem in two of the eight churches I served. I remember reading the Milwaukee Catholic Diocese estimate that, within memory, 30% of their churches were victims of embezzlement. That strikes me as roughly correct.
While these flags may be flying when there is no fraud, in my experience, they are all flying in cases of embezzlement.
- There isn’t enough money.
- Regular, consistent printed reports are not made available.
- Reports on the finances are not clear and understandable to all.
- Financial officers are not rotated.
- Original documentation (such as bank statements, vouchers, and deposit receipts) is rarely available for review.
Churches function with high levels of trust; and an embezzler uses that trust to victimize the church. In this way, financial fraud mirrors sexual misconduct/abuse in that both are the breaking of trust. Perpetrators manipulate others by pretending to be trust-worthy and, often seem to be wonderfully nice and loving people. This is so much the case that those dealing with sexual misconduct in churches look for financial malfeasance as well (and vice versa).
Our goal should be trust without being gullible. Finance committees should be discussing their expectation of the reports they would like to see. An open spirit can be nurtured by inviting questions at meetings about the financial condition of the church. Rotation of duties of financial officers can be an expected part of the office. Members of the Finance Committee should be able to review original financial documents several times a year or upon request.
In my experience, churches must be the negligent victim for embezzlement to happen. Simple and obvious policies and procedures can be followed in churches of all sizes to help prevent fraud from happening.