Money laundering is a crime with an extensive history (Clevenger 53). Moreover, it tends to be interconnected with numerous cases of illicit activities. This type of criminal event has a serious impact on the economy of nonprofit organizations. It has been stated that frauds in nonprofit organizations are closely related to financial and nonfinancial activities (Clevenger 53). On a bigger scale, this situation motivates the whole world to act cooperatively to minimize the adverse effects of money laundering and eradicate this illicit activity in general.
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Two main weaknesses are typical for nonprofit organizations – high staff turnover at all organizational levels and low probability of finding accounting and business experts in the nonprofit field (Clevenger 54). Owing to the stealthy nature of frauds, no one truly knows the amount of money that illegitimately circulates in the transnational monetary system. Fraud is not simply an operational or monetary risk. It is integrally a human menace, meaning it repeatedly crosscuts several occupations and branches within a nonprofit organization (Clevenger 54).
To battle this multifaceted risk, nonprofits face a serious necessity to address fraud, beginning with more direction and devotion from leaders to generate an anti-fraud atmosphere and design a fraud-risk supervision function (Clevenger 55).
Believably, though, because of their assignment-driven motivation and inadequate functional budgets, nonprofit frontrunners are repeatedly left with virtually no time and fewer resources available to proactively elaborate the anti-fraud governance actions. One of the most significant restraints of fraud is realizing that the organization does not accept it in any form and will act proficiently to spot it and take proper action if acknowledged (Clevenger 56).
One of the serious issues that should be addressed within a nonprofit organization is the document destruction. Even though it is a federal crime, numerous nonprofit organizations do not have the policies that would restrict the destruction of public company documents (Clevenger 57). A possible solution to this is to found an inspection committee. The formation of this committee would help get an understanding of the situation in the company and coordinate the appropriate actions in case of fraudulent activity. Another important addition to the preventive measures would be the creation of the document maintenance policy (Clevenger 58).
This policy would simplify the way the company chooses the documents that should be stored or destructed. Moreover, this policy should take into consideration both electronic and traditional (printed) types of documentation. By implementing this policy, the organization will be able to keep its employees contented, and they will be more likely to trust their employer (Clevenger 59). A document maintenance policy is a great way to guarantee data privacy and eradicate such adverse factors as discrimination, intimidation, harassment, or even termination.
It is obvious that fraudulent activity hurts any organization, but nonprofit organizations suffer major losses connected to the monetary assets and human resources. If the organization implements the anti-fraud activities, it will be able to experience all types of benefits and protect itself from fraudulent events (Clevenger 60). The organization will be able to control the activity within the company and expect its employees to behave ethically and honestly. The incorporation of the policies into the organizational practice would establish the necessary level of employee motivation and comprehension of how an effective organization performs (Clevenger 61).
Clevenger, Novella. “Fraud in Nonprofit Organizations.” Fraud Magazine 2.11 (2012): 53-61. Web.