Bribery & Corruption Risks

Fifty percent of respondents in a corporate study expect that vulnerability to bribery and corruption will increase in the foreseeable future. Does your nonprofit risk management plan include a policy to ensure anti-bribery compliance?
It is a common misconception that the U.S. Foreign Corrupt Practices Act (FCPA) does not apply to nonprofits, especially if they are conducting their business on home soil. Despite the reference to “foreign” in the Act, anti-bribery compliance applies to all nonprofit agencies under FCPA, as well as several other acts that work against corruption in agencies.

Source: Boians Cho Joo Young via

The best way to mitigate possible losses due to bribery or corruption is to educate all members of your nonprofit of the dangers of improper payments to raise funds, to institute a clearly defined policy against such practices and to have proper insurance coverage in the event a lawsuit or if charges are filed against your nonprofit agency. Since the financial downturn of 2008, the government has increased its diligence in monitoring business transactions, and more cases than ever are being filed against corporations, businesses and nonprofits.

Since most cases of bribery or corruption include dealings with a third party, it is highly recommended that due diligence be performed on any third party your agency may do business with. It is worth noting that all of the recent cases of enforcement in the U.S. have involved third parties, and the government places the onus on the agency conducting transactions to thoroughly research anyone they are going to work with to profit their business or organization.

Despite the philanthropic intent behind your nonprofit organization, exposure to bribery or corruption is possible, especially when dealing with foreign markets. Your best advantage is to educate your staff and develop a policy that is reviewed often by board members, so your agency is not exposed to a potential act of enforcement.

Lamb Financial Group’s risk management services for nonprofits and social services organizations can help protect your agency from potential risks and provide the insurance coverage you need to protect your organization. Call us at 866-481-5262, or contact us to learn more.

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