ECCU Blog

If you receive an email for your ministry regarding a failed ACH transaction that appears to be sent from NACHA (The Electronic Payments Association), do not open it or you risk infecting your computer with a sophisticated new version of malware that could ultimately siphon large amounts of money from your ministry’s bank accounts.

According to a recent alert issued by the Federal Bureau of Investigation (FBI), the email is likely part of a sophisticated phishing attack designed to capture online banking log-in credentials and transfer funds from your ministry’s accounts. NACHA never sends emails directly to businesses or consumers.

The FBI urges caution whenever you receive communications from senders that would not normally send you email or are not from the sender’s normal email address. You should not open such emails.

To learn more about how to protect your ministry from phishing attacks, visit ECCU’s Member Security page.

“As hard as it may be to believe, embezzlement is a relatively common occurrence in churches.”  — Richard Hammar, attorney and CPA

I recently did some research on fraud while preparing a presentation for ministry leaders about protecting their ministry assets. I expected to find some news articles but was surprised to find so many reports of fraud recently discovered in churches and nonprofits.

Like me, many in the ministry world probably think that embezzlement rarely happens. Unfortunately, we are wrong.

So why is fraud on the rise—and what can we do to prevent it?

We know that three things must exist for fraud to occur: pressure, opportunity, and rationalization. Certainly, the current economic environment has created financial pressure for some workers and volunteers who, given the opportunity, might rationalize this immoral behavior. While we can’t control the pressure workers or volunteers may experience, or even how they may rationalize stealing, we can control the opportunities for fraud or embezzlement within our ministries.

The first step is to conduct a risk assessment. This simply means sitting down with your team and talking about where losses might occur. As you begin to identify those risk areas, you can determine which ones pose the greatest risk for your organization, workers, and volunteers. Typical high-risk areas include inadequate separation of duties between related tasks and a lack of dual custody when handling valuable assets such as contributions.

Addressing these areas doesn’t mean you are creating an environment of distrust. On the contrary; you are building accountability and transparency—protecting both your ministry and the people who work or volunteer for it.

Guarding your ministry against fraud begins with an honest assessment of your vulnerability. Then, apply a sound system of internal controls such as separation of duties, dual custody, and transparency in financial reporting. (You may also want to revisit who has authority over your accounts.)

To learn more about preventing fraud, you might want to read our white paper Handling Cash: A Common Sense Approach to Securing Your Ministry’s Most Liquid Asset.

Has your ministry taken any other steps to reduce opportunities for fraud?

One of the most amazing things to me about being a follower of Christ is that we never stop learning about—and marveling at—the glory of God. Remember in 1 Samuel when the ark of the covenant disappeared and Scripture records that God’s glory departed from Israel? Then again in Ezekiel, chapters eight through ten, the story is told of the Shekinah glory of God departing from the temple. What a sad and dark time. For hundreds of years, the people lived without the glory, without the recognition of God’s holiness.

But God is as rich in mercy as He is in glory, and He did not leave His people forever. When Jesus was born, the glory of the Lord returned to earth! When we celebrate the birth of Christ, we are also celebrating the return of God’s glory.

Yet the birth of Christ was only the beginning of the restoration of God’s glory on earth. Jesus’ sinless life and sacrifice on the cross displayed God’s glory as no other event in history. And Christ’s ultimate return and heavenly kingdom will display the fullness of the glory of God.

Every time we enter the presence of God in our worship, we reflect His glory. It is only by receiving His glory that we may, in turn, bring Him all glory and honor and praise (2 Corinthians 3:18).

This Christmas season, may our hearts be filled with praise for the God who became flesh…for the glory of the Lord has returned!

“And every created thing which is in heaven and on the earth and under the earth and on the sea, and all things in them, I heard saying, “To Him who sits on the throne, and to the Lamb, be blessing and honor and glory and dominion forever and ever.” (Revelation 5:13)

If your ministry accepts debit or credit cards for donations, café or bookstore purchases, or other ministry activities, you will most likely be required to report the total payments made with the cards to the IRS starting in 2012.

According to Becky Kopplin, vice president at The CashLINQ Group, “As one part of the Housing Assistance Tax Act of 2008, merchant processors are now required to report gross payments by credit or debit card to the IRS. This requirement applies to all merchants, including non-profits.”

Kopplin adds, “In order to report this information, the merchant processors must match the ministry’s legal name and tax identification number (TIN) to the IRS record. If the information provided does not match, the merchant processor may be penalized and/or credit and debit card payments made to the ministry may be subject to a 28 percent backup withholding.”

Reporting this information to the IRS does not change your other annual IRS reporting requirements. For example, if you are a church, you will not also be required to complete IRS Form 990 just because you accept debit or credit cards, unless of course you have unrelated business income tax (UBIT) due.

These regulations have been put in place to help ensure businesses adequately report taxable income to the IRS. In most cases, ministries do not utilize debit and credit cards for taxable business but are still required to report.

Kopplin explains, “The best way to verify that your merchant processor has the correct information is to provide them with any notice from the IRS that contains your legal name and TIN, like a 501(c)3 letter, a tax determination letter, or a Request for Tax Payer Identification letter (IRS Form W-9).” 

The 28 percent backup withholding will go into effect in 2013. For more information on this new requirement, see irs.gov.

The list of reasons for churches and other ministries to become members of the Evangelical Council for Financial Accountability (ECFA) just got longer. While tithing is at a 40-year low in mainline churches, giving to ECFA member churches is up four percent from the 2009 level. And contributions to all members are up 5.8 percent.

ECFA presents a full account of members’ giving in its second Annual State of Giving report. To learn more about the benefits of ECFA membership, follow this link.

How does your ministry’s giving compare to the ECFA averages?