HOW TO PROTECT YOUR CHURCH OFFERINGS FROM EMBEZZELMENT

 startchurch.com/blog/view/name/how-to-protect-your-church-offering-from-embezzlement?

 

By: Raul Rivera

The sound of Bishop Jamal’s voice over the phone was heartbreaking as he reported the embezzlement crime to the local police. Only days before, the church announced that the fundraising for its building campaign had successfully raised $500,000 to construct the church’s new sanctuary and children’s wing. The church was going to break ground in two weeks. That morning, however, when reviewing the accounts, the church learned that $50,000 was missing.

How did it happen?

The church’s financial director had been transferring small amounts of money from the church’s account to his personal bank account over the 3-year period of the building fundraising campaign. The financial director was also responsible for depositing weekly donations and had been stealing portions of the cash donations from each deposit.

This was never detected because he was responsible for reviewing and verifying all tithe and offering count sheets and verifying bank deposits. All Bishop Jamal could think of now was, “Could this have been prevented?”

Although this is a fictional story, this is an all-too-common experience for many churches today. Through this post, I want you to find encouragement in the fact that with hard work and due diligence, you can help prevent this from happening to your church.

Lessons we can learn to help prevent embezzlement

We want to think, “This will never be my story.” However, people are broken and misguided at times. There are those disguised as “wolves in sheep’s clothing” ready to offer a helping hand only to take advantage of a position or power when granted.

Not every financial issue a church faces is as tragic as Bishop Jamal’s. However, a well-trained staff and airtight tithe and offering counting policy may be the answer to saving your church from financial ruin.

Let us take a look at some lessons that are better learned early, rather than late.

 Lesson 1: Accountability, Accountability, Accountability

Churches are trusting environments. As a result, some church leaders may have a difficult time creating strict parameters to govern church business affairs. Leaders, paid staff, and volunteers are sometimes held to an honor system type of accountability with no oversight.

However, it is the little foxes that spoil the vine. As we can see from Bishop Jamal’s story, more oversight of the financial director could have saved the church thousands of dollars in not only offerings, but legal fees, and it could have saved the church much heartache.

Proverbs 11:14 says, “Where there is a multitude of counselors there is safety.” This Scripture reinforces the truth that there is wisdom in having multiple people able to understand the church’s financial situation.

This does not have to be a daunting task. The following are some simple ways to implement this principle:

  • Have a team of people trained to count the tithes and offerings and review them.

  • Do a quarterly review of the church’s income and expense statements. Have a skilled financial person review the books to ensure that the offering count sheets, deposit slips, and donor records are consistent.

  • Have a financial audit of the church’s records annually by a third party to verify accuracy of data and to catch any accounting mistakes.

Proverbs 11:14 says, “Where there is a multitude of counselors there is safety.

Lesson 2: Knowledge is key

In our story, Bishop Jamal was not confident in his ability to oversee the financial director because he was intimidated by his lack of knowledge on the subject. While every pastor does not need a business degree, it is a good idea for church leaders to take a hands-on approach to knowing what is going on with the church finances.

Lesson 3: When fraud is found, report it 

One important thing that Bishop Jamal did correctly was to report the fraud immediately when it was discovered.

If members of the board of directors discover embezzlement, they have a fiduciary duty to correct and report it. It is the best way to avoid personal liability. If the board knows that embezzlement has occurred and fails to report it, the church could lose its tax-exempt status (per IRS Regulation 26 CFR 1.501). Moreover, a fine of up to $20,000.00 could be imposed on the board members for failure to correct the problem (per section 4958).

Lesson 4: Create a solid tithe and offering counting policy

Church leaders usually trust other individuals because of their Christian character. Any person who works in the tithes and offerings counting system of the church should be someone the pastor and leadership can trust. If a church uses a volunteer, it must ensure that the volunteer is trustworthy, able to pass a test of scrutiny, and displays a balance between accountability and trustworthiness.

Below are recommended guidelines for how to properly handle church tithes and offerings. Also, if you are in need of a tithe and offering counting policy, give us a call at 844-514-5089 and we will be happy to give you one.

  1. Select multiple money counters, regardless of the size of the church. Never allow this job to be done by just one person during any given worship service. Always have more than one person in the counting room. Enough individuals should be selected so that more than one team of counters can exist and rotate.

  2.  Select a safe room for the counters to do their job. Guard the entrance to this room by a person to ensure that no one enters either accidentally or on purpose. This also provides protection to the counters.

  3.  The counters should use a count sheet to record the tithes and offerings. This form is where the amount of cash in the envelopes is verified and corrected if the amount was entered incorrectly on the envelopes.

  4.  All counting should be done on the same day the offerings are collected. The counters should meet at the same time, count together, sign the count sheet, and prepare a deposit slip. A copy of the tithes and offerings count sheet needs to be given to the treasurer and the secretary.

  5.  Place money in the church’s safe. After money has been counted and the deposit slip prepared, the money needs to be placed in the church’s safe (or a predesignated area that is safe) under the supervision of the treasurer.

  6.  Deposit the specified amount of money counted. The money needs to be deposited by the treasurer, and a deposit receipt showing the exact amount that was deposited needs to be given to the counters.

  7.  Verify for accuracy. Do a spot check of offering counting sheets and deposit slips to verify accuracy and to ensure that funds are being managed properly.

  8.  Put it in writing. We recommend that a church put its tithe and offering counting policy in writing to ensure that the staff members (paid and volunteer) follow the same procedure every time.

Managing ministry finances can be a daunting task, but it is not one you have to do alone. There are many resources available to you.

———————————

START CHURCH offers help such as Kingdom Steward to manage donor profiles, a bookkeeping service to help manage your daily income and expenses, and an Ultimate Church Structure Conference where your team can learn even more about practices to strengthen and protect your ministry. Their goal is to empower your ministry to succeed. For more information, call 844-514-5089. 

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