WHY YOUTH SPORTS ORGANIZATIONS
ARE UNIQUELY VULNERABLE TO FRAUD
Fraud and embezzlement are taking
place at alarmingly increasing rates in amateur youth sports leagues across the
country. What makes these organizations
uniquely vulnerable to crime? Here are a few reasons:
1. Members are volunteers
Nearly all youth sports organizations are manned by volunteers at the
local level. For various reasons, there
is often a low level of accountability and oversight. Getting experienced volunteers to handle finances
is challenging. The volunteers who do
step up are often parents with little financial background or experience. The other parental volunteers in the
organization, in charge of maintaining fields, forming teams or recruiting
coaches, are often thrilled that someone else has volunteered to keep track of
the finances. Frankly speaking, it is
one of the important jobs that no one wants.
This makes for a situation ripe for abuse.
2. The
organization lacks formal structure
In well run organizations, whether registered as a ‘for profit’ entity or
as a ‘non-profit’, monthly financial reports are generated which are carefully
reviewed by officers and boards of directors.
There are also checks and balances that exist for those with access to
the bank accounts. This just simply is
not so with youth organizations. For the
reasons set forth above, even if financial reports are generated, board members
and other volunteers are often not experienced in reviewing them. Further, there is often no formal budgeting
process where organization leaders can compare budgeted figures with actual
figures.
Lack of controls exist for organizations that do have a board of
directors. However, many youth sports
programs do not have a board; they do not have enough people willing to oversee
the programs. Parents often prefer to
pay an additional fee than to volunteer their time. The result is an informally
arranged handful of people with undefined roles in charge of running the
organization.
3. Volunteers
are part of the same community
Board members and other organization leaders are
usually neighbors and parents of kids who go to school together; these folks
interact on a personal level at school functions and on the ball fields. The level of trust which necessarily builds
is unique to the youth sports program.
This trusting environment emboldens someone willing to commit fraud or
embezzle from the organization as he or she may believe they will not get
caught. When the same person is in the
treasurer or similar position for many years, there is a natural level of trust
by those in the organization; however, parents should be thinking the
opposite. In many case studies, the
organizations who lost the most to fraud and embezzlement are the ones who had
the same people in control for many years.
