This episode of The Nonprofit Show gives a critical call to action for nonprofits to be vigilant and proactive in safeguarding their operations and donor relationships in the digital age.

Host Julia Patrick engages with Jennifer Blasy, Manager at YPTC, to explore the dangerous fraud risks associated with digital giving apps in the nonprofit sector. As nonprofits increasingly turn to digital platforms to facilitate donations, the conversation outlines the critical robust internal controls needed to mitigate fraud risks.

Jennifer Blasy, who brings a wealth of experience as a forensic accountant and a consultant for numerous nonprofits, describes the vulnerabilities these organizations face as they adopt new digital fundraising tools. She points out that while digital giving apps offer convenience, they also open the door to potential fraud if not properly managed. “We want to encourage digital giving,” Jennifer notes, “but it’s crucial to tap the brakes and ensure that we are thoughtful about how we’re accepting money and protecting both the organization and its donors.”

One of the big challenges discussed is the use of cash apps for donations, particularly at off-site events or through personal devices. Jennifer highlights the value of using organizational accounts for such transactions to maintain the validity of tax deductions and avoid mismanagement. She explains, “You may have multiple different people using these apps if they’re off-site, and you want to ensure they are using company devices, not their own personal devices, to prevent any mishandling of funds.”

The two also dig into the alarming practice of fraudsters using nonprofit websites to test stolen credit cards. Nonprofits are often targeted because credit card companies are less likely to flag donations as fraudulent, giving scammers more time to exploit the stolen information. Jennifer offers, “Nonprofits can be on the hook for returning the gifts and transaction processing fees, which can be a significant financial burden, especially if thousands of transactions are involved.”

As the discussion concludes, Jennifer shares a poignant reminder: “The best advice we can give is to make yourself a hard target. If things take a little longer or seem more complicated, most fraudsters are going to abandon you and move on to someone a lot easier.”

Nonprofit’s Fraud Risk With Digital Giving Apps from American Nonprofit Academy on Vimeo.