Third of charity frauds 'committed by staff, trustees or volunteers'

New figures released by the Charity Commission also show that one charity lost more than £1m to fraud in 2015/16.

More than a third of the fraud incidents reported last year by charities were committed by staff, trustees or volunteers, the Charity Commission has revealed.

The commission also disclosed that an unnamed charity lost more than £1m in the biggest single reported fraud loss of 2015/16.

The figures were released on the commission’s new anti-fraud website, Charities Against Fraud, as part of an overview of the regulator’s reporting serious incidents regime. They show that of 2,200 serious incidents recorded in 2015/16, 178 were classified as fraud.

The commission analysed a sample of the fraud incidents reported by a broad range of charities from small organisations to well-known multi-million pound charities to identify learning points for the sector – the first time it has done so since the RSI regime was introduced in 2007.

The analysis found that the common factors in many cases were weak governance and poor financial controls, often coupled with excessive trust placed in key individuals within the charity. 

Several cases also involved fraud perpetrated by charities’ overseas partners.

In a blog post on the commission website, Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission said the overview was part of the commission’s work to help the sector increase its resilience to fraud. 

She said one established approach to tackle fraud "is to learn from frauds that have been committed and to disseminate the findings to help identify emerging risks, long term trends and provide evidence to base specific preventative action on".

The overview includes anonymous case studies which highlight difference examples of how charities can be targeted by fraudsters.

"Some of these examples may sound very basic, and I’m sure most would think they would not be fooled in these scenarios, but you’d be amazed how often the basics are missed," Russell said.

She said charities could protect themselves from internal and external fraud through the robust and consistent application of financial controls, and the implementation of commission good practice advice.

"Equally important is encouraging a culture of professional scepticism and appropriate challenge where everyone is encouraged to play their part in stopping fraud and to come forward with any concerns, no matter how small," she said.

She also said charities should not be afraid to report incidents to the commission.

"Knowing the challenges charities face allows us to warn others where necessary and help put in place better safeguards to protect charity funds," she said.

"Being a victim is nothing to be ashamed of; but burying your head in the sand will only increase your vulnerability to fraud."

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