Earlier this year, a pastor in Oklahoma was charged with embezzling more than $350,000 from his congregation over a five-year period.

In another recent case, a U.S. district court found a California church administrator guilty of stealing from her congregation’s food pantry and youth ministry.

Meanwhile, a Texas pastor received a prison sentence of 35 years in a deed fraud scheme involving stolen church properties.

Sadly, such stories are becoming all too common. Many congregations overlook their vulnerabilities — until it’s too late.

In a survey from Church Law & Tax, 3 in 10 church leaders said their congregations had experienced financial misconduct. Of those, 14% reported losses exceeding $100,000. Perpetrators included pastors, board members, and treasurers.

Half of respondents who had experienced financial misconduct said they previously believed it could never happen in their church.

No one should assume their ministry is immune. After all, dishonesty and greed are part of the fallen human condition.

The Center for the Study of Global Christianity at Gordon-Conwell Theological Seminary estimates embezzlement will cost Christian organizations $70 billion in 2025. By comparison, the center projects churches around the globe will receive $60 billion in foreign missions funds during that same period.

Imagine how much more the Church could accomplish by staunching losses to fraud and embezzlement. Not only would the gospel’s reach grow, but so would trust and generosity.

As an auditor who has investigated fraud in churches and nonprofits for more than 30 years, I’ve seen firsthand how these issues impact all areas of ministry.

Damage from financial scandals typically extends far beyond the immediate loss. Donor confidence also takes a hit, along with the church’s reputation in the community.

Church leaders have a responsibility to steward well the resources with which God entrusts them. Consider Jesus’ words in Luke 16:10–12:

Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? And if you have not been trustworthy with someone else’s property, who will give you property of your own?

Preventing Fraud

According to the Church Law & Tax survey, the top five ways fraud occurs in congregations are through inappropriate expenses or reimbursement; stolen contributions; theft of church property; check forgery; and payroll fraud.

Using a corporate credit card for personal purchases is a common fraud scheme I see, particularly in churches. The administrator in California secretly opened five credit cards in the church’s name and used them for personal purchases. She then paid off the monthly statements using church funds.

In this case, one person performed the bookkeeping with little oversight or accountability from leadership. The theft went undetected for years, with the church’s losses exceeding $300,000.

The Association of Certified Fraud Examiners (ACFE) conducts a biennial study of global fraud and has repeatedly found that nonprofits, including churches, have fewer internal controls and less fraud awareness training than for-profit corporations.

Training and prevention make a significant difference. In fact, the ACFE found that fraud detection occurs 2.5 times faster with training than without it. Additionally, anti-fraud controls lead to faster detection and lower losses.

Regardless of size or budget, every church should provide fraud-awareness training and implement internal controls.

Five Safeguards

There are five practical steps church leaders can take to safeguard their ministry resources.

The top five ways
fraud occurs in
congregations are
through inappropriate
expenses or reimbursement; stolen contributions; theft
of church property;
check forgery; and payroll fraud.

1. Provide ethical oversight. Create a culture of accountability in your organization. When senior pastors, board members, and staff model integrity and accountability, it sets the tone for the entire organization.

Think strategically about the church board. Consider recruiting one or two board members with financial knowledge to help guide these processes.

2. Establish clear policies and procedures. Document your policies, and communicate expectations for all staff members and volunteers who handle church finances.

Put together a plan for managing financial resources. Minimize exceptions, requiring everyone to follow the rules, including those in leadership.

Every church should have a code of conduct policy, as well as protocols regarding conflicts of interest, whistleblower protection, and cooperation with internal investigations.

Require all staff members to participate in fraud-awareness training. The Evangelical Council for Financial Accountability offers a free ChurchExcel program, which includes training videos and examples of policies to implement.

3. Separate financial duties. Divide responsibilities for key financial tasks among different individuals. This prevents any one person from controlling all aspects of a transaction.

Hiring additional employees is not necessary for separating duties. Board members or trusted volunteers can perform some of these tasks.

For example, be sure at least two people are handling donations and making deposits.

When issuing payments, have one person write the check and a different individual sign it after verifying the invoice.

Require employees to submit credit card statements and receipts to a supervisor or board member for review and approval before paying monthly charges.

Assign a board member to review and approve the lead pastor’s expense reimbursements.

Standardize these and similar practices, creating appropriate oversight at every level.

4. Provide transparent reporting. Prepare regular reports of the church’s financial position (balance sheet) and activities (income statement).

Include budgetary comparisons, showing how actual income and expense figures may differ from expectations. Be willing to make course corrections if the income is trending lower than expected or expenses exceed budgeted amounts.

Transparent reporting promotes accountability and allows church leaders to see how resources are utilized.

5. Conduct regular audits. Scheduling routine internal and external audits helps detect irregularities. It also ensures financial practices align with the church’s policies and procedures.

Perform regular tests and reviews to confirm expectations. For example, identify expense lines that exceed budgeted amounts, and investigate the reasons.

Test various financial processes — such as donation collection, check writing, or credit card use — to ensure compliance with stated policies.

Use CPA audits to verify the accuracy of your church’s financial statements, and internal audits to measure the strength of financial controls and processes.

Biblical Stewardship

Biblical principles of stewardship provide the foundation for how we should manage church resources.

By taking proactive steps and implementing key controls, church leaders can create a culture of accountability, reduce the risk of fraud, and manage resources with integrity and accountability.

This issue is about more than money management. Biblical stewardship honors God, reflecting His values and prioritizing His mission.

Proverbs 11:3 says, “The integrity of the upright guides them, but the unfaithful are destroyed by their duplicity.”

This article appears in the Fall 2024 issue of Influence magazine.