The Risk & Control Series | Part 1 of 3

The Risk & Control Series | Part 1 of 3

Expenditure Risk: Where the Money Leaks and How to Stop It

Not-for-profits exist to serve their communities. But when expenditure controls are weak, funds intended for mission-critical work can quietly disappear – through fraud, mismanagement, or simple human error.

The data paints a concerning picture.

The Risk is Real and Growing

In 2023–24, the Australian Charities and Not-for-profits Commission (ACNC) received 2,309 concerns about charities, a 10% increase on the prior year. Of those concerns:

• 26% related to private benefit – individuals using charity funds for personal gain
• 21% related to the mismanagement of funds

That means nearly half of all concerns raised with the regulator were directly tied to how money was being spent.

High-profile cases in recent years have involved the theft of $400,000 to $500,000 from community and educational not-for-profits. And these are the cases we know about.

Research suggests that two-thirds of affected organisations never report incidents to the police, meaning the true scale of financial loss across the sector is likely far greater than what appears in official data.

Why Does This Keep Happening?

In most cases, expenditure fraud and mismanagement are not the result of sophisticated schemes. They are the result of inadequate controls:

• No formal delegation of authority framework
• Manual or paper-based approval processes
• Limited visibility over real-time spending
• Outdated or inconsistent expense policies
• Over-reliance on trust in small teams

Many not-for-profits operate with lean teams, tight budgets, and a culture built on goodwill. These are admirable qualities, and often are the heartbeat of NFPs, but they can also create blind spots. When one person manages procurement, approves invoices, and reconciles accounts, the opportunity for error or misuse increases significantly.

The Control: Technology-Enabled Expenditure Oversight

Modern spend management platforms such as Weel offer not-for-profits a practical, scalable way to strengthen expenditure controls without adding administrative burden.

These tools allow organisations to:

• Set pre-approved spending limits by role, project, or cost centre
• Require digital approvals before funds are committed
• Capture receipts and documentation in real time, reducing reconciliation gaps
• Generate audit-ready reporting that supports compliance with ACNC obligations
• Flag unusual transactions through automated monitoring

This is not about adding red tape. It is about replacing informal trust-based processes with transparent, auditable systems – while still empowering staff to do their work efficiently.

The Governance Link

Expenditure risk does not sit in isolation. It connects directly to board-level governance obligations.

Directors of not-for-profits face legal liabilities like company directors, regardless of whether they serve in a voluntary capacity. This includes the duty to act with reasonable care and diligence in overseeing the organisation’s financial affairs.

A board that cannot demonstrate it has appropriate financial controls in place is exposed — not just to financial loss, but to regulatory scrutiny and personal liability.

Where to Start

If your organisation has not recently reviewed its expenditure controls, consider these steps:

1. Map your current approval process – who can spend, how much, and who approves it?
2. Identify single points of failure – where does one person hold too much control?
3. Evaluate your technology – are you still relying on manual processes, email approvals, or shared spreadsheets?
4. Review your delegation framework – is it documented, current, and understood by all staff?
5. Brief your board – ensure directors have visibility over expenditure controls and any identified gaps

Protecting your organisation’s funds is not a back-office task. It is a governance priority.

This is Part 1 of The Risk & Control Series from The Breakthrough Office – practical guidance to support not-for-profits to identify, understand, and manage organisational risk.

If you would like support in managing or assessing the expenditure controls of your organisation, reach out to us at: [email protected]

Special Offer: Mention this article series to receive 20% off a Governance Health Check.