Fireproof or Fire Hazard?
Jeff Klick

Dr. Jeff Klick has been in full-time ministry since 1982. He married his high school sweetheart, Leslie, in 1975, and they have three adult children and twelve grandchildren.

In addition to being the senior pastor at Hope Family Fellowship, a church he founded in 1993, Dr. Klick serves as an instructor for The Institute for Church Management, and is on the board of The Council for Gospel Legacy Churches.

Fireproof or Fire Hazard? by Jeff KlickA group of leaders walked into the bank to sign the final papers for their new building loan. Finally, after years of fundraising, the down payment had been raised. As the loan officer pushed the document across the table towards the president of the counsel, soft sobs could be heard from the back of the group. A shaky voice said, “Don’t sign it.” Everyone turned and stared at the source of the voice, the church treasurer. “Why on earth would you say such a thing?” he was asked. His reply, “There isn’t any money, I spent it all. I have a girlfriend…” [i]

Pastors being led away in handcuffs, church staff being fired for stealing, and administrators sneaking out of town due to financial mismanagement happens. If fact, it happens more that we might suspect. The news outlets gleefully share the stories. The enemies of Christ rejoice when Christian fraud is exposed, while the church or ministry suffers, and many times slowly dies.

Shocking? Over dramatized? We could only wish it were. Based on research from Miller Management Systems (a Church accounting and management firm based in Kansas City and Springfield, Missouri, serving over 1,500 ministries), only about 20% of churches operate in what is known as the “fireproof” condition of ministry. 80% are a “fire hazard,” financially speaking. [ii]

Is this just an isolated condition or bigger than any of us imagine? Consider this sobering data:

According to the Status of Global Mission report from the Center for the Study of Global Christianity, Christians worldwide committed more than $39 billion in church-related financial fraud during the first half of 2014. Compare that to the $35 billion spent on worldwide mission word during the same timeframe. [iii]

Some may argue that the numbers are high or exaggerated. Even if that is true, how much fraud is acceptable in the Church? The real questions should be why is there any fraud and how do we prevent it? We can deny the validity of the numbers or we can take whatever precautions we can to help save our ministry from becoming part of the statistics.

Fireproof and fire hazard are not referring to the amount of old storage boxes around the furnaces, but to the financial accounting and money management procedures a ministry uses. While we would not be comfortable with attending a worship service in a facility that was labeled a “fire hazard,” we seem perfectly content to attend the same place where the finances are at risk.

The fact that so many Christian ministries are at risk is indeed bad news. The good news, however, is that with some inexpensive changes, most ministries can move from being a fire hazard to nearly fireproof. Does it cost huge amounts of money to make these changes? It costs no more than moving the boxes away from the open flame of the furnace. There might be some inconvenience and a small amount of resistance to implementing change, but isn’t it worth it to limit the risk?

Given the reality and severity of the problem, we co-authored our second book to assist churches entitled, Confessions of a Church Felon; Protecting Your Ministry from the Flames of Fraud. The book follows the true story of a church fraud case and provides the tools and techniques to help limit fraud in our ministries. The felon agreed to be recorded and each chapter includes actual comments from all involved parties, and includes steps that could have been taken to prevent the devastation. The book is now a required textbook at Midwestern Baptist Theological Seminary.

This Could Never Happen Here!

One hurdle that must be overcome is the belief that no one we know would ever steal from our ministry. All of our people are good, solid, mature believers beyond reproach. The sad truth is that in almost every fraud case investigated, all of those committing fraud were Christians. There hasn’t been any professional criminals or Mafia members; but typically, long-term faithful church members that became thieves. There are many reasons why this happens; but make no mistake, it does and we must help prevent it.

We can’t provide all of the details of how to prevent fraud in an article, but there are many checks and balances that can be put in place by any ministry of any size that can limit fraud. Whenever fraud takes place, it is at least partially due to opportunities being present. Logic would dictate that if we could limit the opportunity, we will limit the instances of fraud.

Please Consider

Every ministry has cash receipts including offerings, money received through the mail, and often coming through multiple ministry activities. Are there proper controls in place for the handling of the funds? Are guidelines written and are they being followed? Are the people dealing with the money protected from accusations? These details and more need to be addressed by every church and ministry.

If a ministry receives any donations, they will eventually spend them. A great deal of fraud takes place during this process but can be prevented with good controls. How are cash disbursements dealt with in the church? What controls are provided to assure that money is being properly spent? Who approves and accounts for the expenditures? Are the policies written and clearly understood? What about credit and debit cards?

Since most ministries will hire employees, it is essential that they follow wise and legal procedures for payroll. As recent headlines have shown, the IRS is not overly friendly towards Christian groups, so great care is needed. Who approves salary changes? How is the housing allowance approved or calculated? Does the church need to follow IRS guidelines? These questions must be answered and they better be answered correctly! The IRS typically does not play nice and many ministries have incurred huge fines for failure to comply.

Unless the ministry keeps its funds strictly in cash, financial institutions will be involved. Each of these banks and investment firms issue statements to their customers. Who balances them and who reviews the financial statements of the church? What are the financial statements telling the leadership and can these tools provide insight into the possibility of fraud?

Make the Decision to be Informed

There is more involved in limiting fraud, but certainly not less than answering these questions. Whatever the cost, to implement the necessary changes to improve the financial controls of a ministry, will pale in comparison to the expense and devastation caused by fraud. The Church leadership needs to be trained and informed about both the dangers of fraud and how to prevent it.

We as Christians should hold to the highest standards in our handling of money and never settle for anything less. The Church should be known for excellence in the way we deal with our money and not known as money grubbers, thieves, and careless. Why can’t the Church set the standard in integrity instead of tending toward just getting by?

Even with all of the above, we can never eliminate every chance of theft or fraud, but we can certainly take steps to help limit the opportunities and temptations. We can leave our front door open when we go on vacation and just hope all is well, or we can install a deadbolt. We can remove the paint cans and boxes from the open flame by our furnace, or just pray they do not explode. As in so many other arenas of our life, the choice is ours. Choose wisely.

The article presented above is relating to the topic of financial fraud in the church as discussed in the book, “Confessions of a Church Felon,” by Glenn A. Miller, Jeffrey A. Klick, and Rodney A. Harrison. For further insights and practical help from the authors, please consider the following resources available from Amazon (amazon.com/-/e/B009L3BNLW) or jeffklick.com:

  • Confessions of a Church Felon – Protecting Your Ministry from the Flames of Fraud
  • Pastoral Helmsmanship – A Pastor’s Guide to Church Administration

A pastor, professional, and professor team up to write practical books to help pastors and leaders effectively serve the Body of Christ. With over 100 years of experience between them, they possess the skills and experience necessary to break down into understandable language the administrative difficulties of ministry.  

[i] Actual case one of the authors experienced while serving as a church administrator.

[ii] mmsmidwest.com Research conducted over decades of interaction with hundreds of clients via audits and multiple personal cases handled by Glenn Miller, a certified fraud examiner and President of the firm.

[iii] http://www.brotherhoodumutal.com/index.cfm/resources/ministrysafety/article/church-fraud