Prevent fraud losses by educating your nonprofit’s staffers

Occupational (employee) fraud remains a persistent threat to nonprofits of every size and mission. It’s capable of quietly draining funds your organization needs to support programs and services. So for nonprofit leaders, investing in antifraud training is one of the most practical and cost-effective ways to reduce both the likelihood and impact of fraud.

According to the Association of Certified Fraud Examiners’ (ACFE’s) Occupational Fraud 2026: A Report to the Nations, both for-profit and nonprofit organizations lose an estimated 5% of annual revenue to fraud. Nonprofits experience lower median losses per fraud scheme than other types of organizations ($69,000 vs. $120,000 for private businesses). Even so, few charities can afford to lose as much as $69,000!

Fortunately, the ACFE’s report shows a strong connection between fraud awareness training and lower fraud losses. Organizations that provide antifraud education to both staff-level employees and management generally experience lower fraud losses. Training also increases the likelihood that fraud will be detected early, which is important because the longer fraud schemes run, the more costly they tend to be. For example, the ACFE has found that frauds detected within six months cause a median loss of $40,000, while schemes that persist for more than five years result in median losses exceeding $1.1 million.

In addition, employees who receive fraud awareness training are more than twice as likely to report observations or suspicions (generally using an anonymous reporting mechanism such as an email address or web portal). This is critical because whistleblowing is the most effective occupational fraud detection method. It uncovers fraud in 43% of cases.

Fraud awareness training should go beyond providing a brief presentation once a year. The most effective programs help staffers recognize risks and understand reporting procedures. They also need to be confident in speaking up when something seems wrong.

Your organization can strengthen its antifraud training efforts by:

› Using real-world nonprofit fraud scenarios,

› Teaching staffers to recognize common red flags, such as unusually friendly vendor relationships, missing documentation and requests to bypass established procedures,

› Clearly explaining how to report concerns via phone, email or web-based tools, or by directly reporting to supervisors, HR staffers or designated ethics contacts, and

› Training managers on how to respond appropriately if they receive fraud or ethics complaints.

Provide an initial antifraud session when onboarding new staffers. Then refresh the memories of all workers throughout the year with short reminders, team discussions and staff newsletter or Intranet content.

The ACFE’s report found that all antifraud controls are associated with lower losses and faster detection. In particular, management review, proactive data monitoring and surprise audits have been shown to yield measurable results.

Nonprofit board members can help ensure that fraud prevention remains a governance priority by including funds for internal controls and antifraud training in operations budgets. Executives can reinforce a strong culture of accountability by communicating a zero-tolerance approach to fraud and demonstrating that concerns will be taken seriously and investigated promptly. This can mean that anyone caught committing fraud or theft is terminated from employment and referred to law enforcement.

Nonprofit organizations can significantly reduce their exposure to fraud by equipping staffers with the knowledge to recognize suspicious activity. Antifraud training not only improves detection but also helps limit losses if misconduct occurs. That investment can protect both your organization’s financial assets and your reputation. Contact us with your questions and for help with internal controls.