Approximately 10% of nonprofits are victims of fraud each year. While that may seem like a low number, losing any amount of funds or data due to fraud can damage your nonprofit’s mission and make it challenging to support your beneficiaries.
International Fraud Awareness Week is an excellent opportunity for you and your staff to come together and educate yourselves on new and evolving types of fraud and implement measures to minimize the risks associated with these attacks. This article examines how nonprofit and government organizations can implement more effective fraud prevention strategies, providing practical tips and solutions.
What Is International Fraud Awareness Week?
International Fraud Awareness Week is a global event that takes place during the third week of November, aiming to shed light on fraud through various fraud prevention campaigns, support, and educational events. According to a 2022 report, organizations lose an average of 5% of their annual revenue to fraud, resulting in a median loss of $117,000 before they detect these scams. International Fraud Awareness Week raises awareness about this concerning issue and encourages organizations to implement anti-fraud training for all employees.
Fraud can occur in any organization, regardless of its size, and may result from either internal or external attacks. For instance, a cybercriminal attempting to hack into an organization’s database is committing external fraud. In contrast, a disgruntled staff member seeking to intentionally cause damage to their employer is engaging in internal or occupational fraud. Employee fraud is much more likely in smaller organizations than in large corporations and can result in:
- Theft
- Bribery
- Embezzlement
- Benefits and payroll fraud
These types of fraud may seek access to money, property, sensitive data, or rights. Since fraud can occur in any organization, you and your team must understand your organization’s fraud risk. Fraud can take many forms, including emails, phone calls, advertisements, physical mail, and even internet-based threats such as viruses or malware. No matter the type of fraud, it’s a crime that can leave organizations with high expenses in damage and expose personal patient, customer, or sponsor information.
International Fraud Awareness Week helps organizations protect themselves by conducting fraud risk assessments, identifying areas of concern, and developing new safety protocols. They also help nonprofits incorporate fraud prevention training into their organization’s policies and invest in fraud prevention software and technology.
Upcoming Events for Fraud Education
During International Fraud Awareness Week, many anti-fraud professionals and communities come together to host events that examine the damaging effects of fraud and how to prevent it. Many supporters have organized conferences, webinars, lectures, interactive investigation scenarios, and podcast episodes this week to educate organizations and employees on how to detect and prevent fraud. Here are some of the events that the Association of Certified Fraud Examiners (ACFE) and other associations will host during this global week:
- National Whistleblower Day: This event highlights the importance of combating fraud, corruption, and other crimes by celebrating those who speak out against wrongdoing and report instances of fraud and abuse, thereby promoting a more just society.
- Online Shopping Podcast: This episode explores online shopping frauds and scams, including those perpetrated by scammers posing as legitimate online sellers through fake ads or websites, targeting unsuspecting shoppers. This episode is one of seven in the “Let’s Talk Fraud” series, which spreads awareness of popular fraud schemes that individuals and organizations can be vulnerable to.
- Cybercrimes Podcasts: This genre of podcast explores fraud in the form of cybercrimes, including theft and trafficking, where criminals operate behind screens and wait for opportunities to target organizations and individuals with innovative and evolving schemes.
- Jobs and Employment Podcasts: This episode provides warning signs and preventive tips for detecting fraud when searching for jobs and employment. Many of these scams begin by asking individuals to hand over money to secure a spot or describe a highly paid job with minimal effort required.
- Phishing Email Podcasts: Phishing scams often appear as emails that seem genuine or originate from a well-known source, targeting consumers and organizations to convince them to enter financial or personal identifying information. These types of podcasts discuss what to look for in these suspicious emails and how to protect private data.
Key Takeaways for International Fraud Awareness Week
Understanding these schemes and protecting your nonprofit organization from financial, data, or property theft is one of the most effective ways to reduce the chance of cybercriminals targeting you. Let’s look at some of the top takeaways for organizations and individuals looking to protect themselves against various forms of fraud:
- Never provide sensitive information unnecessarily: Your organization likely handles financial, government, donor, or staff data on a daily basis, which can all be at risk if you share it with unauthorized entities. Always be on the lookout for red flags and false companies seeking to gain information they don’t need.
- Restrict passwords and authentication: Never disclose passwords, access codes, or personal identification numbers (PINs) to anyone except authorized staff. If these security controls fall into the wrong hands, they can give fraudsters access to your important accounts.
- Regularly check your financial reports: Regular internal audits of your organization’s credit cards and financial data can help you identify unauthorized transactions or fraudulent attempts from employees or outsiders.
- Be cautious of scam attempts: Ensure employees know not to click on suspicious links or attachments in emails from unknown sources or on any website that asks for personal or financial details.
How to Reduce Fraud Risk
Reducing fraud should be one of your organization’s top priorities. No matter how small or large your organization and staff base are, minimizing fraud starts with understanding its origins and educating your team members on how to avoid these scams. Here are five tips to reduce your organization’s vulnerability to fraud.
- Be proactive: The first step in reducing fraud risk is to implement proactive measures. While reactive protocols are essential for recovery, preventing fraud at the source is the most effective way to keep your organization, staff, sponsors, and beneficiaries’ data safe.
- Train employees on vulnerabilities: Be aware of the different types of fraud to which your organization is vulnerable. For instance, have you previously experienced phishing scams, credit card fraud, identity theft, or issues with your security controls? If so, it’s critical to tailor your mitigation strategies to these types of threats.
- Establish more robust hiring procedures: Though protecting organizational functions from external hackers is critical, it’s just as important to include these security controls within your organization. Regularly reassess your risks with new and existing staff, and ensure that no new staff members have access to accounts or confidential information.
- Empower employees with awareness: Educating and communicating with your team members about your anti-fraud policies and methods is an effective way to keep everyone updated on the newest cybersecurity threats or potential weak spots in your system.
- Implement a fraud alert solution: Any type of fraud can severely impact your organizational reputation, donor dollars, and overall well-being. Using a fund accounting solution with various fraud notification features, you can react quickly to abnormalities in budget or staff member activity. This solution can also help secure your data and provide internal controls to review, edit, change, and manage your organization’s details as needed.
