Control Your Finances
Safeguard against embezzlement and theft

It could happen to you. Let’s say that for years you have trusted Karen to pay the bills and monitor the books at your church for years. She alone is responsible for counting and documenting funds collection and maintaining various financial accounts. During her time with your church, she has developed a trusting relationship with your peers in church leadership and congregation members. In fact, her two children even participate in weekly Sunday school classes.

What if one day you discover Karen has embezzled more than $200,000?

Instantly, all the trust and respect you invested in her disappears, leaving you to deal with the devastation of her actions.

As scenarios like these demonstrate, it is critical that, as a church leader, you know how to protect your organization’s finances. In the short-term, you face loss of funds, but long-term consequences are far more detrimental:

Membership levels could decline as the congregation begins to lose confidence in your church. Ultimately, the negative impact on stewardship can be staggering.

Many churches implement risk-management practices for transportation safety, youth and children’s ministry and property safety—but what about financial security? It is just as important that protective measures be in place to reduce the risk and temptation of theft from petty cash pools, collections, offerings, tithes, special-event accounts, general checking and savings accounts, special group accounts and investment funds.

Several simple, easy-to-incorporate methods are available. By putting them into action, church members can rest assured their gifts are protected and that ministry will continue, uninterrupted.

Policymaking 101

The first step in developing a financial security policy is to identify how money should be handled, counted, deposited, reported and audited.

This prevents the misappropriation of funds and ensures both staff members and volunteers protection in the event they are ever accused of theft.

In addition, a financial policy is more likely to deter employees and members from stealing since they know a cash management system is being carefully observed.

In most churches, ushers play key roles in the collection process. Since safeguarding funds begins with these men and women, train them how to keep funds safe during and after collection. Ushers should watch for suspicious, out-of-place individuals and be ready to act should they witness a theft in progress. After a collection is taken, they should immediately place the funds in a locked safe or another secure location.

Some church leaders prefer to count funds the following day whereas others count it as soon as the service ends. For those who prefer to do it the next day, the collection should remain in the safe or be taken to the bank by two adults until it is time to be counted. For those who prefer post-service counting, two unrelated adults should conduct the process in a locked room. These two people should be present any time church funds are being counted, recorded, transported or deposited. Each time a collection is counted, ask both individuals to initial a written form noting the amounts received in checks and cash.

Some churches prefer a three-person approach (again, unrelated adults), making sure to distinguish between money counters, treasurers and recorders of proceeds. Holding different people accountable for different tasks decreases the risk of embezzlement. This approach also holds that counting teams be rotated on a weekly or monthly basis and that envelopes, cash, checks and other currency be kept visible at all times during the counting process. Double-checking figures and balancing the funds is also important, as is filling out signed, dated lists of all currency, coins and checks every time. Finally, three-person accountability groups should submit complete deposit slips signed by all individuals present.

As a church leader, you should never allow a member to take home funds for any reason. For added security, some experts even recommend that a monthly bank statement be mailed to the home address of someone other than the person who signs the checks.

Screen workers and monitor the books

To help protect funds, be sure to conduct background checks and screen all volunteers and employees who handle funds. At minimum, select people who exhibit integrity, and make sure they are able to practice discretion with sensitive financial information.

Many church leaders fail at this point in the process because they don’t believe their volunteers or employees are capable of theft or embezzlement. The unfortunate truth is something many leaders eventually discover: The most unlikely people usually are the culprits.

Also regularly schedule and conduct audits by someone other than your church’s financial secretary or treasurer. Good candidates include congregation members trained as a certified public accounts and others with strong financial backgrounds. While such audits should be done every year, some churches elect to hire an outside firm to conduct a complete audit every two or three years. No matter what you decide, it is important that an audit be completed before any new members get involved in fund collecting or in the role of treasurer.

Action builds trust

Surprisingly, embezzlement in churches is a fairly common occurrence—one that almost always happens when one person is considered so trustworthy that safeguards are deemed unnecessary.

If such a person is managing your funds, promptly put in place an anti-theft/embezzlement procedure. Remember, guarding against embezzlement is not the only goal; you must also protect those who handle money in the event that a false accusation is ever made against him or her.

Get the ball rolling and put carefully thought-out written policies in place as soon as possible. It can be difficult to persuade members to contribute to ministry if they aren’t certain their gifts will be safely managed. Your responsibility as a church leader is to make a system of trust a priority while also trusting members and volunteers to carefully exercise the responsibilities they have accepted.