0 Comments

A new congregation in Northern Kentucky sprang up earlier this year after 300 members departed from an established church amid allegations of $500,000 being mishandled. A church in Oregon is struggling to repay $20 million in debts incurred from operating losses and a failed broadcasting venture.

Such local church issues reflect broader scandals that in recent years have sent the founders of several Christian-led organizations to prison for multi-million-dollar investment scams.

Church financial scandals occur where there is no accountability or functioning board to oversee expenditures, said Paul Nelson, president of the Evangelical Council for Financial Accountability.

This story and all the great free content on Church Central is supported by: Carreker

A manager with a Memphis-based financial services company sees another factor — a lax attitude towards managing money.

Bank account-ability

In marketing payment-processing software to churches and ministries, Ken Harris has been surprised at how slowly many handle donations. Some take several days to deposit money collected at weekend services, he said.

“If you get a donation on Sunday you should have a relationship with a bank to get that in on Sunday or Monday,” said Harris, manager for Carreker's NexGen Remittance software.

“You don't want to hold cash or checks at any location. If you get things deposited sooner, you get funds available sooner for needed purposes.”

Failure to quickly deposit checks increases the possibility of some returning for insufficient funds, creating additional delays in accessing the money, Harris said.

The longer cash sits in a drawer or a filing cabinet, waiting for someone to make a trip to the bank, the greater the opportunity something could happen to that money, he added.

Besides the opportunity for scandal, churches and ministries are losing income on any interest-bearing accounts and paying service fees for any bad checks.

Although Carreker offers its software as an efficient money management tool rather than a way to avoid fraud, Harris can sense when churches have been victimized.

“They don't come forward with that information (but) you can kind of read it in their faces,” Harris said. “They know of some instances where some funds have disappeared.”

NexGen is an image-based system. Checks are scanned into a computer and can be electronically transmitted to banks for instant crediting to the church's account.

While this enables quicker access to funds, improved management of donations and better record keeping, Harris said it offers additional fraud prevention. With electronic images, there is a permanent trail of who handles offerings as they move through the system.

“If somebody is going to pocket money out of the donation bucket, there's not much you can do about that,” said Harris of the need for integrity among money counters. “But one of the ways you can avoid that is being able to take any content of a donation envelope and scan it.”

Its price tag of $20,000 to $25,000 means NexGen is most cost effective for churches with more than 500 members. Still, with less-expensive alternatives available, Harris said computerized record keeping is a must for even the smallest congregation.

“We are living in the 21st Century,” he said.