The Charity Commission and Fraud Advisory Panel have jointly published a report entitled 'Preventing Charity Fraud – Insights + Action'. The report is the result of the largest ever analysis of fraud committed against UK charities. It includes both insights into the extent of the problem and actions charities can take action to tackle fraud.
According to the report, one in 25 charities suffered at least one fraud in the past two years, with large charities far more likely to have been victims. However, the report suggests that in the charity sector awareness of fraud remains low, as over a third of charities think that they are not vulnerable to the most common types of charity fraud, and less than 9% of charities have a fraud awareness training programme.
The report provides useful insight into how charity fraud can happen. Notably, over half the charities affected knew who committed the fraud, and in only 14% of cases the fraudster had no previous connection to the charity. The most common type of fraud is Mandate/Chief Executive fraud, which involves impersonation of legitimate organisations that the charity works with, or senior staff of the charity, and is usually conducted via hoax emails.
The eight principles of good counter-fraud practice for charities include reporting every individual fraud to regulators and other agencies, encouraging the use of fraud prevention controls within the organisation and being alert to continually evolving fraud threat.
The report is available here.