Nonprofit Financial Management News: Old Scam Resurfaces, Charities Warned

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In the latest nonprofit financial management news, an old scam has resurfaced, this time in Richmond, Virginia. Authorities report that a fake check-cashing scam involving “Ken McFarland” or “Keith McFarland” has struck local charities. Fortunately, the charities spotted the scam without falling prey. Authorities are now warning charities nationwide about this particular scam and advising concerned nonprofits to report similar incidents to local authorities. The Better Business Bureau’s Wise Giving Alliance urges other charities nationwide to be wary.

At RBP Methods, we care about our clients. The following outlines the scam that has plagued many nonprofits for years. We urge you to conduct due diligence on donations. For better grant and donation management, we offer software selections to streamline the process. Contact us today for more information.

Check-Cashing Fraud: How Scam Artists Target Charities

This particular scandal begins with contact from someone proposing a large donation. The Richmond-area contact called himself “Ken McFarland” or “Keith McFarland.” Eighteen charities in the Richmond area were contacted by this person with an offer of a five-figure donation. The names and contact information for the donation were from an architectural firm in the U.K.

Once the charities received the checks, a phone call quickly came from “McFarland” claiming an error had been made. The caller requested that the charities refund $10,000 of the donation and wire the money back to them. The checks turned out to be fraudulent. Three of the 18 charities accepted the checks and deposited them to their accounts.

Bennett Weiner, chief operations officer of the BBB WGCA group, stated that the scam is an old one. In the past, scammers placed large orders with a business, paid by check, then claimed some portion of the order was a mistake. They demanded a refund before the companies typically deposited funds, thus receiving a wire transfer before their original checks cleared the bank. Companies were left not only with a bounced check, but with the associated fees and a deficit from whatever money was paid to the scam artists.

Preventing Nonprofit Fraud

Nonprofits nationwide are urged to be on the lookout for similar activities. To prevent falling victim to a similar scam, you can put into place certain procedures and protocols to circumvent scam artists.

  1. People generally do not give such large amounts without first developing a good rapport or relationship with a nonprofit. If the request comes out of the blue, be suspicious.
  2. Investigate the giver on your own. Search online for their company, names, and information.
  3. Request that money be donated via a money order or bank check, which is authorized by the distributing bank, rather than from a personal check if you decide to proceed with the donation. If the giver balks, be wary.
  4. If you do cash large checks and accept the donation, do not refund money without first confirming that the original check has cleared the bank.
  5. If it sounds too good to be true, it probably is. If a donation seems like a generous windfall, be on your guard against scams.

These scam artists aren’t confined to the Virginia area or to one particular type of charitable organization. They may strike at any time. Businesses, individuals, and others have all fallen victim to them. Be on the lookout, be wary, and prevent costly fraud. Nonprofit management also includes fraud detection and prevention.

Nonprofit Financial Management Solutions from RBP

At RBP Methods, we care deeply about our clients’ success. We offer financial management, fundraising solutions, and grant management software, as well as nonprofit financial management software and consulting to help you choose the right software solution. For more information, contact us or call 503-648-9051.