UK Reveals Analysis on Charity Fraud
Thursday, 3rd November 2016 at 8:59 am
More than a third of charity fraud cases in the UK came from inside the organisations – perpetrated by trustees, staff or volunteers, according to the first published report of serious fraud by the UK Charity Commission.
The commission said it had published, for the first time, an overview of the serious incident reports (RSIs) it had received about fraud to identify wider learnings for the not-for-profit sector.
The analysis showed that during the 2015/16 financial year more than 2,200 serious incidents were reported to the commission by charities of which 178 were classified as fraud.
“The fraud-related RSIs we sampled affected a broad range of charities – from small, local organisations such as school parent teacher associations to large well-known charities with thousands of staff and multi-million pound budgets – and included both internal and external frauds,” the commission report said.
“Over a third of the frauds sampled were ‘internal’, meaning frauds originating within the charity – perpetrated by trustees, staff or volunteers. The highest single reported loss to fraud was over £1 million (A$1.61 million).”
The commission said the common identifiable trends in many of the fraud cases included weak governance and poor financial controls, often coupled with excessive trust placed in key individuals within the charity.
“Several cases related to fraud were carried out by charities’ overseas partners, where the legal and regulatory context can often be difficult to manage. This highlights the need for enhanced due diligence and oversight for those charities working with international partners.”
The report said that with the growth of technology, cyber-enabled fraud was becoming increasingly common.
“This can include ’mandate’ fraud, where charities are deceived into diverting legitimate payments to fraudsters’ bank accounts, or ‘chief executive’ fraud, where fraudsters, often using publicly available information, impersonate senior officers of the charity and trick charity staff into making payments to the fraudster’s’ bank account,” it said.
The report, Detecting Fraud Against Charities, can be downloaded here.
The UK Charity Commission has also launched a new website dedicated to helping charities combat fraud.