• Todd

    This is great guidance. I’d love to see your strategy go further, especially as concerns communication with donors (to retain confidence), media (to maintain reputation), other staff (to retain people or gauge the extent of the violation). Are there other operational things that should be done like securing data or the office? Also, is this strategy spearheaded by the executive committee or is every action taken a full-board endeavor?

  • William Henry, CIMA Volunteers Insurance

    If your organization has employee/volunteer dishonesty coverage, be sure to put your insurance company on notice as soon as you become aware of the embezzlement. The insurance contract requires that claims be “timely,” and you do not want to be arguing with your insurer about whether your claim was timely. Your insurer will provide guidance from that point.

  • Margot Haliday Knight

    As the victim of a serial embezzler, i decry the decision to “keep it quiet”. If the non-profits (yes plural) who had hired my embezzler had been more forthcoming (and I made reference calls) I would not have had one of the most difficult six months of my non-profit life.
    I went public, insisted on prosecuting, reached out to donors, etc in order to stop this man from victimizing anyone else.
    Also, a communications strategy is critical when this happens or the press will create it for you.

  • Linda Gola

    I want to suggest that by “quietly have the stolen funds returned ” an organization may be saving themselves bad publicity which is fine, but does open up the possibility that the person will go on to another organization and commit the same crime. There have been cases in my city of serial embezzlers who drifted from business to organization to business. When they were found out by one place, they just went to another and because it was handled quietly, yet another organization suffered the same fate. I personally know of one craftsman who had his business wiped out by such an embezzler who then moved on to a nonprofit and nearly did the same thing.

    So while it’s one thing to protect your own reputation, it might be good to consider the overall impact of having such a person out their reeking havoc on the community.

  • John Gear

    Nonprofits should also quickly call their insurance broker and review their general business liability policy; such policies often have an employee theft coverage provision, integral or as a rider. That can be helpful in providing the funds to do the audit.

    I read the post as nearly outright suggesting that, if the organization can be made whole, there is no need to call the cops. I strongly disagree, because that is how embezzlers get away with repeating the conduct — no one calls the cops because the organization wants to keep it hush-hush; this sets up the next victim nicely. It’s bad for the nonprofit sector as a whole.

    I strongly feel that any business needs to have a simple standard for calling the cops:

    The one I propose is that you ALWAYS call the cops when management (or the board, in certain cases) reasonably thinks that a crime has been committed against the organization — whether by a donor, a volunteer, or an employee. If there’s a clear policy so that everyone knows that, it also helps deter embezzlement in the first place.

  • Diana Kern

    Great information however, I would add that the Board has a responsibility to critical stakeholders (donors, foundations) to contact them with a statement on how they are handling the situation and their plan for taking a leadership role in the matter. Funders should NEVER hear about theft by an insider at a large level from media, staff or anyone other than the officers of the Board of Directors.

  • Boris Frank

    Maybe I missed it, but I saw nothing in this posting that discussed preventative measures…including carrying appropriate dishonesty insurance or bonding for any person in the agency involved in having access to organizational assets.

    It is the responsibility of the Board to be certain that assets are protected BEFORE the horse escapes the barn.