A number of media outlets have reported that allegedly March of Dimes Canada has been hit with a $800,000 fraud over an 8 year period.   Here is a report from consumer reporter Sean O’Shea.  “Toronto woman charged in alleged defrauding of the March of Dimes of $800K

What can we learn from this event?  Here are some quick thoughts:

  • it is vital that charties have good financial management systems especially internal controls.  You might find this book from Oxfam GB helpful: Building Capacity Through Financial Management: A practical guide [it is free]
  • when a charity discovers fraud it should go to the police as it appears March of Dimes Canada has done (it should not hide the fraud, hope no one notices and leave other charities and people vulnerable to the perpetrator
  • be prepared to talk to the media and don't hide your head in the sand (March of Dimes Canada was talking to the media today as you can see from Sean O'Shea's report)
  • admit mistakes were made if mistakes were made (March of Dimes Canada admitted that they did not have appropriate segregation of duties, which is an essential part of internal controls).

Unfortunately, we far too regularly assist charities that have been defrauded.  Every charity should be reviewing their internal controls at least annually.  Also you might find this guidance from the Charity Commission of Engalnd and Wales on Internal Financial Controls for charities helpful.   The main reason you should have internal controls is that people are human and make unintentional mistakes.  If you have a system to prevent mistakes you will save your organization from lots of headaches and also make it less likely that someone will deliberately take advantage of the charity.