Few Charities Have Anti-Fraud Measures - UK Report

As Australians dig deep for the Victorian Bushfire Appeal and some reports of theft and unscrupulous collectors make the news media, a timely report from the UK suggests that up to 60% of charities have no anti-fraud policies and procedures in place.

The UK’s independent watchdog, the Fraud Advisory Panel has released a report on the sector’s vulnerability to fraud called Breach of Trust.

The findings reveal that even though reported fraud in the UK is still less common among charities than mainstream business, the impact on individual organisations and the sector as a whole can be devastating in terms of financial loss, and damaged reputations.

Despite this the survey found that many charities (and especially smaller ones) still have no serious anti-fraud measures or training programs in place. And anecdotal the survey found that there is a widespread assumption that fraud is something that happens only to someone else.

Perceptions of vulnerability
– Half of all respondents think fraud is a major risk to the charity sector.
– A quarter think it is a bigger risk to the charity sector than to other sectors.
– Charities believe themselves to be vulnerable because unethical people exploit the sector’s presumption of trust and goodwill.
– A quarter think their charity is most vulnerable to fraud by staff or volunteers.

In terms of risk management two-thirds of respondents (but almost 90% of very large charities) have designated one or more people to be responsible for fraud prevention. Typically this is the chief executive, finance director or a trustee. But 60% of respondents have no anti-fraud policies and procedures in place at all.

The other 40% are most likely to have a whistle blowing policy (18%), fidelity or crime
protection insurance (16%) and/or a risk register that includes fraud (14%). Only 11% have an anti-fraud policy, and 14% of those do not systematically communicate
it to staff.

Overall, 7% of respondents have been the victim of fraud within the last two years.

Fraud is significantly more common among the largest charities (20%), those that
employ full-time staff (15%) and those with trading subsidiaries (20%). The presence of
volunteer workers makes no difference to the incidence of fraud.

The full report, including graphical presentations of the detailed findings, can be downloaded from the
website at: http://www.fraudadvisorypanel.org (Select the ‘Publications’ tab and then ‘Research’.)