Nonprofit News

Fall 2016

Nonprofit News

Charitable Giving Hit Record High Last Year

August 25, 2016

Americans gave an estimated $373.25 billion to charitable organizations last year, setting a record for the second year in a row, according to Giving USA’s Annual Report on Philanthropy, which tracks giving from individuals, foundations, and corporations.

Giving USA Foundation reported a 4.1 percent growth in giving from 2014 to 2015. The largest share of charitable gifts came from individuals and totaled $264.58 billion. Gifts from all sources increased over the year, although giving by individuals accounted for two-thirds of the growth. Growth of 6.5 percent was seen in giving by foundations which have seen growth in their assets in the recent period.

The report is used by charities throughout the country as an indicator for gauging future giving prospects. It concludes that the growth in giving in the past two years signals that the economic recovery from the recessionary period continues and that household finances have stabilized. The report also notes that charitable giving grew at a higher rate than gross domestic product growth, showcasing American generosity.

Charities aren’t exempt from fraud

While charitable giving reaches highs, fraud also continues to affect charities, according to the Association of Certified Fraud Examiners’ annual report on occupational fraud and abuse. The report concluded that charities or businesses may lose five percent of their revenues annually as a result of fraud.

In its 2016 “Report to the Nations on Occupational Fraud,” the association concluded that billing schemes and check tampering schemes posed the greatest risk to organizations. Not surprisingly, the median loss from those schemes increased the longer the fraud lasted. The median duration of frauds included in the study lasted 18 months. The most common concealment methods were creating and altering physical documents.

The most common detection method in the study was tips from others. Small organizations had lower rates of implementation of anti-fraud controls and suffered the same median loss from fraud as larger organizations. But these losses have a greater impact on small organizations.

In charitable organizations, the frequency of loss from billing schemes, fraudulent expense reimbursements, and check tampering were much higher than average compared to all industries.

These findings underscore the importance of appropriate board governance activities within charities. The Ohio Attorney General’s “Avoiding Theft in Your Nonprofit” publication includes a number of suggested procedures and policies aimed at preventing fraud within charities.

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