Merepeka Raukawa-Tait: Fraud is on the rise in not-for-profits

A number of not-for-profit organisations have come to the attention of the Serious Fraud Office recently. Photo / File

Fraud is not just the domain of big companies. Private or public. It is found in the not-for-profit (NFP) sector too. And is on the rise.

We like to believe that people who work in the NFP sector do so because they support the aims and objectives of the organisation. They want to work where they know their contribution - on the board, as a staff member or as a volunteer - will lead to the achievement of the organisation's vision. NFP organisations are big business.

I'm on the board of one with an income of $30 million. This is not chicken feed, so NFP boards need to know their business. If you're not on top of your game, you, the organisation, stakeholders and staff could suffer significant reputational damage.

I have just attended a workshop that highlighted how important leadership and governance is in NFP organisations. It was well attended and a timely reminder to boards that today they need the required governance skill set to do their job effectively. That boards must attract the leaders who will work diligently on behalf of the organisation and not just "warm a seat" at the board table. They don't get involved in the day to day running of the business but watch carefully to see that things get done. They hire the best people they can afford and let them get on with it.

NFP encompasses a wide range of organisations, from charities, clubs, unions, trade associations, sport organisations and political organisations to arts, education and all other social services. There could now be as many as 200,000 NFP organisations in New Zealand. Many have grown over time, some considerably. If they have done a good job their income, whether from a government contract or through other channels of funding, will most likely have increased as well. Yet how often do they "press the pause button" and consider if the skill set of those who govern the organisation has remained current and relevant? Public monies come from the taxpayer and the public are also very generous through donations and giving to their favourite cause. They need to be assured that every dollar can be accounted for and is spent for the purposes for which it is given. Taxpayers and donors put an enormous amount of trust in NFP businesses. These businesses have usually worked for years making the dollars stretch to cover all their costs. But they are businesses and must operate in a business manner.

At the workshop, we heard NFP organisations that have come to the attention of the Serious Fraud Office recently, and this includes a number of high-profile national Maori entities, could well be the tip of the iceberg. And that 90 per cent of fraud in these businesses is committed by women. They are not passive bystanders. However, I would wager that in the private and public sectors the situation would be reversed, and men would take that starring role. We find it hard to believe that people working in these organisations will rip them off but, when you don't have robust systems and policies in place and carry out regular monitoring, particularly around the performance of the CEO, you are leaving yourself wide open.

If anything, life for NFP organisations will get tougher not easier. New and varied funding streams will need to be found to sustain businesses, and there is a raft of new legislation coming down the pipeline, including the issue of health and safety in all workplaces.

But it is leadership in the NFP sector that requires immediate attention. Great leaders are the ones that transform an organisation and deliver its full potential to its stakeholders and its beneficiaries. They have the ability to get things done. You will not find these leaders breaching trust.

• Merepeka lives in Rotorua. She writes, speaks and broadcasts to thwart the spread of political correctness.