Former church treasurer accused of stealing $400,000 — here’s how to prevent embezzlement and protect donor funds before it happens

The warrant also says she admitted to making the purchases in an interview with law enforcement officials.

Mechanicsville United Methodist Church isn’t a gigantic church; the United Methodist Church website says it has just around 225 attendees. So how did the church not notice hundreds of thousands of dollars going missing? And what can the church — and other nonprofits — do to make sure similar things don’t happen in the future?

Here’s what to know about how nonprofit embezzlement happens, as well as how to protect yourself from it.

How embezzlement slips past unnoticed for years

Every company has to deal with financial bad actors — but nonprofits are, perhaps unintuitively, especially prone to them. A 2013 report from the Washington Post says that approximately one sixth of major embezzlements were from nonprofits or religious organizations.

The nonprofit sphere’s approach to embezzlement has no doubt changed in the 13 years since that report was published, but a few things still make nonprofits a fertile ground for fraudsters. Nonprofits are more likely to be under-resourced, which means workers have less time and ability to put toward financial accountability.

This might also mean that workers could be in worse financial positions compared to corporate workers, potentially increasing the likelihood that they’ll feel inclined to or justified in embezzling.

As the church treasurer, it’s possible that Seward had sole access to the church’s bank accounts, or it’s possible that she had the sole responsibility of managing those accounts. Having an extra person checking her work could have helped the church catch her embezzlement sooner.

But because nonprofit workers are united in a common philanthropic goal, nonprofit leaders might have more trust in their employees, assuming they wouldn’t act contrary to the organization’s mission.

All of these make it harder for nonprofit organizations to spot embezzlement early, allowing bad actors to divert more funds for longer.

Embezzlers often make it harder to catch their work by diverting funds that the organization hasn’t accounted for to personal accounts or for personal purposes. Since these funds were never noted as belonging to the organization, they aren’t immediately obviously missing in audits.

Doing this can help embezzlers get away with theft for years without being caught.

The safeguards you can put in place to protect against embezzlement — as a leader and a donor

There are ways for nonprofits to protect themselves against bad actors — and there are ways for donors to make sure their own funds are used the way they were supposed to be used.

Nonprofits should ensure that more than one person is in charge of managing the company’s finances. Putting multiple people in charge of financial management — and requiring them to check each other’s work — can help businesses protect against a single bad actor.

Regular audits also help spot financial mismanagement or fraud before it goes on for years. Nonprofits should regularly train employees on how to spot financial fraud and provide clear reporting lines for whistleblowers. If something illegal is going on, employees shouldn’t have to guess on how to properly handle it.