New research reveals the biggest fraud risks to charities

21 Oct 2019 03:06 PM

Find out about the biggest fraud risks to charities and what you can do to help protect your organisation.

Earlier this year over 3,300 charities took part in a research study about fraud awareness, resilience and cyber security.

We have published the results of the fraud research study which suggests that many charities are not doing the basics to protect themselves.

Over two thirds of charities (69%) think fraud is major risk to the charity sector and internal (insider) fraud is recognised as one of the biggest threats.

But the findings show charities are not always recognising how vulnerable they are, and not consistently putting basic checks and balances in place:

• over a third (34%) think their organisation is not vulnerable to any of the most common types of charity fraud
• over half (53%) of charities affected by fraud in the past 2 years knew the perpetrator
• 85% of charities think they are doing everything they can to prevent fraud, but almost half don’t have any good-practice protections in place

The gap between awareness and practical action poses a threat to charities’ valuable funds, and to public trust and confidence in the sector.

Simple steps to protect your charity’s funds

• 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

International Charity Fraud Awareness Week

Get involved between the 21 and 25 October 2019 to help promote openness and honesty about fraud.

It’s an opportunity for trustees, employees, volunteers and the wider public to learn more about the growing threat from fraud, and to highlight the good work of those charities that are successfully tackling fraud and reducing the harm it causes.

Download the Charity Fraud Awareness Week supporters pack from the Fraud Advisory Panel website.

Register to access the free Fraud Awareness Hub for important fraud prevention help sheets, guidance, videos and question and answer sessions.

The Hub will give you access to a new ‘Tackling Charity Fraud - Eight Guiding Principles’ document. You can use this to strengthen your charity’s resilience to fraud.

We have also worked with the National Cyber Security Centre (NCSC) to develop cyber security guidance relevant to charities of all sizes.

The Cyber Security: Small Charity Guide provides simple, free or low-cost 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, making it easier to have productive conversations with technical colleagues.