Article
The power of fraud awareness training and whistleblower policies for your not-for-profit organization
July 17, 2025 · Authored by Mumta Taneja
Recent headlines have highlighted the significant impact fraud has on employees, donors and the public, serving as a reminder that no organization is immune to fraudulent activity. This underscores the importance for not-for-profit board members and management to understand their shared responsibilities and implement strong governance and fraud risk management strategies.
Among the many essential components of an anti-fraud program, this article focuses on two key strategies for prevention and detection: fraud awareness training and whistleblower policies.
Conducting regular fraud awareness training
Proactively educating the board, management, staff and volunteers about fraud risks and prevention strategies is crucial. This education should include training on ethical behavior, internal controls and how to report suspicious activities.
Fraud awareness training is essential to building a consistent understanding of fraud risks across all levels of an organization, including board members and executives. However, a single training session is not enough. To be effective, organizations should implement a comprehensive training program that includes regular ongoing sessions.
These sessions should reinforce key concepts, highlighting common red flags and outline steps to take when fraud is suspected. They should also emphasize the importance of reporting suspicious activities, including the organization's reporting mechanisms (refer to whistleblower policy leader practices below).
Each training should be tailored to the organization's specific risks and the broader not-for-profit industry. Content should build on previous sessions to keep material relevant and should evolve over time to address emerging fraud schemes.
Furthermore, training can help employees identify fraud sooner, which will help mitigate any damage caused by fraud. As stated in the ACFE Occupational Fraud 2024: A Report to the Nations, not-for-profits that provided fraud awareness training uncovered frauds more than 2.5 times faster than those that did not and lost almost half as much money; yet not-for-profits have the lowest fraud awareness training implementation rates. This statistic alone demonstrates the importance of fraud prevention training and the heightened awareness employees need.
Adopting a whistleblower policy
Adopting a whistleblower policy is another crucial strategy to help detect fraud early. Implementing a whistleblower policy can encourage a culture of transparency and accountability, empowering employees or external stakeholders to speak up when they see or hear potential suspicious activity.
Leading practices for implementing an effective whistleblower policy
- Tailor the policy to the organization's size, structure and scale
- Provide multiple mechanisms for reporting: online forms, emails or discussions with management or internal audit. Anonymous phone hotlines monitored by third parties are used less frequently (according to the ACFE Occupational Fraud 2024: A Report to the Nations), but still provide valuable benefits, including enhanced whistleblower anonymity, greater comfort in reporting suspicious activity and real-time interactions for urgent matters. Organizations should implement reporting mechanisms that are most effective and cost efficient for fraud detection.
- Incorporate anti-retaliation policies to ensure employees are comfortable reporting suspicious behavior without being subjected to fear of retaliation. A third-party whistleblower hotline helps minimize the risk as the reporter's identity may not be known.
- Route allegations to the appropriate individuals skilled in conducting investigations
- Clearly outline the investigation process
- Investigate hotline reports on a timely basis
- Report new investigations and the progress of ongoing ones to those charged with governance (e.g., the board and/or audit committee) on a periodic basis
The ACFE Occupational Fraud 2024: A Report to the Nations noted that while having a whistleblower hotline can reduce fraud and associated losses, it's more impactful when the hotline is accompanied with fraud awareness training. Together, these two measures can help establish a structured approach to managing fraud risks and protecting the organization from potential financial and reputational damage and maintain the trust of stakeholders, partners and donors.
The ACFE Occupational Fraud 2024: A Report to the Nations noted that organizations with hotlines were nearly twice as likely to detect fraud via tip as organizations without hotlines, illustrating the crucial role hotlines play in a comprehensive fraud detection program.
Baker Tilly can help
Our specialists have experience providing fraud awareness and prevention training to not-for-profits with varying degrees of fraud risk management maturity. If your organization is in the beginning stages of designing your fraud risk management program or would like assistance with delivering fraud awareness training, please contact our Baker Tilly team.
Fraud risk awareness, prevention and mitigation in not-for-profits
Baker Tilly recently presented a fraud risk session at our 2025 NFP governance and fiscal workshop. Watch the recording for more insights!
