Charities lost £8m in 2018/19 in instances of fraud that were reported to the police, new figures from the accountancy firm RSM show.
Responding to a request to Action Fraud made under the Freedom of Information Act, RSM said that the average loss per fraud case was £7,428, with 1,057 cases of fraud in charities being reported to the authorities.
Fraud is a hugely under-reported crime, with the latest Annual Fraud Indicator, produced by the accountancy firm Crowe, the credit rating agency Experian and the University of Portsmouth, suggesting that fraud cost the charity sector £2.3bn in 2017.
RSM’s FOI response showed that employee fraud accounted for £1.69m, the highest for any type of fraud in RSM’s research.
Abuse of positions of trust came second at £1.63m, with mandate fraud – where employees are tricked into redirecting payments to a fraudster – coming third at £1.23m.
But mandate fraud was the most prevalent crime in RSM’s data at 173 instances, followed by employee fraud with 95 cases and 62 cases of hacking.
Nick Sladden, head of charities at RSM, said: "While this data is unlikely to show the true level of fraud affecting charities, it is quite revealing about the types of fraud to which charities are most regularly falling victim.
"While some larger charities might be able to absorb the losses from fraud, for smaller charities already struggling with cashflow issues a loss in the thousands could prove critical."
He also highlighted mandate fraud and insider fraud as particular problems.
"Frankly, if staff receive the right training and if the correct controls are in place, there's no reason why these types of fraud attempts should be successful," Sladden said.
"It's also clear that some charities need to keep a closer eye on their employees and on those in positions of authority. No one wants to work within a culture of distrust, but charities still need to be alert to the threat of insider fraud and ensure that proper checks and balances are in place to minimise the risk."