National Fraud Authority's review says 11 per cent of charities have fallen victim
The charity sector loses £1.3bn a year to fraud, according to a report released today by the National Fraud Authority.
The figure is equal to about 2.4 per cent of the sector's total income, according to the Annual Fraud Indicator 2011. The indicator says fraud against the voluntary sector makes up about 3 per cent of all fraud in the UK, which costs the country £38bn a year in total.
According to the report, about 11 per cent of charities have been victims of fraud in the past five years. Of these, 47 per cent said the fraud had been by an employee or volunteer.
The figures are based on a survey of 10,000 charities, of which more than 1,000 responded. The NFA, part of the Attorney General's office, said it was the first time an accurate figure for charity fraud had ever been reported.
The figure includes fraud against charities, such as that by employees and fraudulent applications for grants, as well as some money lost because of the impact fake charities have on real ones.
But it does not include donations collected by organisations that are not registered as charities and do not intend to use those donations for charitable purposes.
The report says charities believe their main internal fraud risks are theft of supplies and equipment, and skimming off collection money.
The unauthorised use of a charity's name to collect funds is considered to be the most significant external fraud risk, followed by fraud perpetrated by suppliers or contractors.
Sam Younger, chief executive of the Charity Commission, said the report confirmed his organisation's belief that fraud against charities was under-reported.
"However, it also shows that instances of charity fraud remain low and the public can be assured that the vast majority of charitable money is going straight to good causes," he said.
"Charity trustees must be more fraud-aware, and I hope that today's report is a wake-up call to charities that think it will never happen to them."
He said charities should read the commission's guidance to ensure they were not at risk of fraud.