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Anti-Fraud & Bribery Policy Template

Humentum has developed an anti-fraud and bribery policy template for NGOs. This free resource is designed to be edited to match your needs and circumstances.

Download the Anti-Fraud & Bribery Template

 

What is Fraud?

Fraud is the act of intentionally deceiving someone in order to gain an unfair or illegal advantage (financial, political, or otherwise).

Typical examples of fraud include:

  • Stealing money or assets
  • Abuse of procurement process, often collusion with suppliers to pay inflated prices
  • Pocketing of cash receipts
  • Bribes paid to NGO staff by suppliers or beneficiaries
  • Supplies sold for personal gain
  • Staff being paid inflated expenses (supported by false receipts)
  • The same activity being funded by two different donors
  • Unauthorized personal use of assets (e.g. telephones, vehicles)

Why do people commit fraud?

Fraud Triangle

Understanding the motivation of fraudsters is one of the keys to prevention. Without oversimplify a clearly complex area, research indicates that fraud is most likely to occur when the following factors are present:

Opportunity

Where the amount of money flowing through NGOs is large and internal controls are weak, it is easy to commit fraud, and the risks of getting caught are low. When there is little consequence for being caught, or someone knows they are protected by powerful people, the door is wide open.

Pressure: Need

The vast majority of NGO employees do not resort to fraud to meet their needs. But the stress of finding school fees or medical bills for dependents or similar pressures, can lead people to convince themselves that they need the money as much as the beneficiaries do.

Pressure: Want

The expectations of family members. The desire to be successful.  The idea of being less ‘successful’ than your peers. The demands of an addiction. All these can feed into wanting more than you have.

Pressure: Habit

What starts out as a small need, easily met by a small fraud, can grow into a habit whereby someone feels compelled to continue stealing to maintain a certain lifestyle. If fraud is habitual within the organizational culture, even honest newcomers can get sucked in.

Rationale

Fraudsters justify their actions to themselves. Staff are more likely to commit fraud if they are de-motivated, disgruntled, do not share the organization’s vision, where there is a wide gap between highest and lowest paid staff, and when they do not feel appreciated or valued.

Dealing with a fraud

  • All allegations of fraud must be treated seriously and investigated as soon as possible. Internal investigations must be fair and take the time to gather real evidence before coming to conclusions. This is a detailed and time consuming job. The police may be able to help, particularly in bringing the perpetrator to justice and recovering funds.
  • An investigation may help you understand how to avoid the same type of fraud happening again in the future.
  • NGOs should record the details of each fraud and the actions they take in response in a fraud register (find this in our Anti-Fraud & Bribery template!) This is an important document for monitoring fraud and strengthening controls in the future.

Fraud is hard for NGOs to come to terms with because it involves a betrayal of trust and because it can lead to negative reports which could damage fundraising. But the real betrayal of trust is to donors, staff, beneficiaries, and the communities you serve. Do you need help with a fraud investigation?

Here’s how we can help.