New research reveals the biggest fraud risks to charities

Fraud risks to charities
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29 October, 2019


Over two thirds of charities think that fraud is a major risk, according to new research from the Charity Commission.

Despite this, less than 9% of charities have a fraud awareness training programme.

The findings are recorded in two reports - one focusing on fraud and another on cyber crime.

According to the research, charities do not always recognise how vulnerable they are. They need to put basic checks and balances in place to protect themselves:

  • 34%  think that their organisation is not vulnerable to any of the most common types of charity fraud.
  • 53% of charities affected by fraud in the past two years knew the perpetrator.
  • 85% of charities think they are doing everything they can to prevent fraud, however most don’t have good practice protections in place.
  • Only 29% of charities reported cyber crimes to the police.

The commission recommends a number of simple steps which charities can take in order to protect themselves:

  • Introduce and enforce basic financial controls (for example have at least two signatories to bank accounts and cheques, undertaking regular bank reconciliations).
  • Make sure no one single individual has oversight or control of financial arrangements – effective segregation of duties is a crucial method of preventing and detecting fraud.
  • Encourage staff, volunteers and trustees to speak out when they see something they feel uncomfortable about.

The commission has also worked with the National Cyber Security Centre (NCSC) to develop cyber security guidance to charities of all sizes:

  • Cyber Security: Small Charity Guide provides simple steps to improve cyber security.
  • The Board Toolkit is relevant for larger charities. It helps boards and senior managers understand cyber security from a governance perspective. This makes it easier to have productive conversations with technical colleagues.

The commission has also worked with the Fraud Advisory Panel and UK Finance to develop the Fraud Awareness Hub – a one-stop shop on how to prevent, detect and respond to fraud. Organisations need to sign up in order to access free help sheets, case studies, webinars and practical tutorials.

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