Church Fraud: Is Your Ministry Protected?


One third of all church congregations experience some form of theft or fraud each year. Fraud is an intentional deception made against an organization for personal gain, and it can go undetected for months or even years. Church fraud often takes place over a long period of time and involves stealing small sums intermittently, making it difficult to detect.

Churches are often too trusting with members and employees, giving too much leeway and providing an opportunity for fraud to occur. Church leadership should take time to observe and question all financial information in order to strengthen internal controls.

There are several signs of possible fraud for which church leadership should be on the lookout:
- A significant decrease in revenues
- An increase in expenses
- Missing documents and/or disorganized records
- An employee or volunteer who refuses to take time off
- Resistance to promotions or changes in responsibilities

In order to protect both its finances and its reputation, the church should proactively develop internal controls to prevent acts of fraud. Below are some examples of internal controls.

Divide financial duties and responsibilities. Make sure that different people are responsible for offering collection and counting, depositing funds, and reconciling statements. The person cutting checks should not be the same person approving checks and reconciling the bank statements.

Invest in annual CPA reviews or audits. These reviews can seem costly, but not detecting fraud can be far more detrimental to your organization.

Have a written financial policy and make sure all employees or volunteers involved with church funds are aware of the proper procedures for handling money. In addition, conduct background checks and credit reports on all persons handling church funds.

Rotate employees and volunteers. Employees who work in finance-related positions should be rotated on a regular basis and required to take time off. Have someone else perform their duties during this time (at least one complete week on an annual basis) as this is the method in which fraud is generally caught.

Maintain controls over credit cards to prevent unauthorized spending. Inappropriate credit card spending is a common type of church fraud. Be sure that someone other than a card holder is responsible for reconciling credit card statements each month and that terminated employees and volunteers no longer have access to church credit cards.

Prevent mishandling of donations by having two volunteers document each donation’s intended purpose. Leaving the job of documentation to one person increases the risk of funds being directed to the wrong account.

Follow your instincts. If you have a suspicion that someone is stealing from your organization, investigate. You can even contact a trained fraud examiner for help.

If you suspect fraud, do not share that information with anyone involved in the process. Instead talk to a local accounting firm that can help you determine your next steps.

If fraud has occurred, the best response is to involve the authorities. Many churches don’t want to prosecute and will simply fire the employee responsible, allowing that person to move on to other organizations and commit fraud again. Reporting the crime gives the church the chance to recover some of what was taken, since insurance companies often require prosecution for the church to collect coverage on stolen goods. In addition, the church can warn other employers of the person who committed fraud, since prosecution would make the fraud a matter of public record. If that person is not prosecuted, the church will have to be more careful about what they say to the perpetrator’s future employer, as laws on what information may be disclosed in a reference vary from state to state.

Developing and maintaining strong internal controls and policies can help protect your organization from fraud. Regular audits and reviews can reveal possible weaknesses in your financial policies and procedures, allowing you to revise and create better controls. Through careful planning and follow-through, you can help protect your church from fraud, allowing your organization to focus on ministry.

To learn more recommended financial practices for protecting your church, click here to download our Interactive Guide to Church Finance.

For more information on risk management and protecting your church from fraud, click here to check out our risk management resources or contact AGFinancial Insurance Solutions at 877.616.5206 or

This information is not legal, financial, or tax advice. Information is from sources deemed reliable. Information is subject to error, omission, withdrawal, or change. Contact your own legal, financial, or tax advisor before taking any action.

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