Hundreds of charities have fallen victim to fraud during pandemic, regulator reveals

Fraudsters have swindled hundreds of charities out of funds totalling millions of pounds since the start of the Covid-19 pandemic in March, according to the Charity Commission.

Charities have reported being victims of fraud or cybercrime 645 times since the start of the coronavirus crisis, amounting to £3.6m in total losses to charities, the regulator said today. 

The commission is warning trustees and donors to strengthen their defences as it fears the pandemic has created environments that are enabling charity fraud.

The warning comes as part of Charity Fraud Awareness Week, which starts today. 

The regulator is concerned that remote working, virtual activities and sign-off processes, combined with charities’ tendencies to place goodwill and trust in individuals, might make them especially vulnerable.

One example of fraud reported to the regulator involved a fraudster using a beneficiary's story of personal struggle during the pandemic to pressure a charity into making a payment quickly. 

The commission said there had also been cases of charity employees diverting funds into their personal bank accounts, and even selling charity equipment for personal gain.

Helen Stephenson, chief executive of the Charity Commission, said: “We cannot afford for charitable work to be disrupted by criminals. When fraud hits charities, its impact is felt far beyond the balance sheet – it is people that are let down, often hard-working volunteers or people in desperate need.”

Research by the commission has found that nearly three-quarters (73 per cent) of charities affected by fraud go on to change their procedures or enhance internal controls to avoid future incidents. 

In addition, two-thirds of frauds are picked up by financial controls or audit, so the regulator says that some simple checks and controls, together with a strong counter-fraud culture, can be key to disarming fraudsters.

Charities can find free tools and advice via an online hub as part of Charity Fraud Awareness Week. 

Stephenson said the published figures were likely to be the tip of the iceberg because fraud was generally underreported.

“We cannot fight fraud if we cannot find it, so I’d urge anyone involved in charities to speak out if they see anything suspicious,” she said.

The regulator also fears that the public’s generosity could be abused before cash reaches charities. 

Action Fraud has received reports of a scam email, allegedly from the government, asking for donations to the NHS during the outbreak.

Pauline Smith, head of Action Fraud, said: “Recently, criminals have been taking advantage of the increase in charitable donations being made during the coronavirus pandemic, setting up fake charities or impersonating well-known ones. 

“We would encourage people not to be put off donating to charities, but instead to be vigilant and make sure you do your research to ensure you are giving your money to a legitimate organisation.”

Any charity or individual who thinks they may have been a victim of fraud can report it to Action Fraud online or by calling 0300 123 2040.

Topics:
Finance Fraud

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