Opinion: Fraud is dwarfed by incompetence

Since the tsunami, we have all been galvanised into so much giving that the obituaries for charity were proven to be premature. Like you, I wonder how much of the ad hoc collections in shops and pubs will stick to someone's fingers.

In ordinary times, how serious is fraud in charities? Very serious, because it assaults the atavistic notion of charity, rooted deep in the British psyche. The volunteer with the collecting box who says 'it's for charity' has said enough for most of us: we believe it's for a good cause. How big is fraud in charities? We'll never know and 2004's high-profile cases are not the whole story. But though there is pilfering and diversion of charity resources, I speculate that it's on nothing like the scale in the for-profit sector, where it's widely seen as a victimless crime.

That it exists is not in doubt; remember the trial of 'Lady Aberdour' some years ago? The then-chairman of the charity she robbed told me ruefully that, like most charities, they presumed honesty, taking no account of the daily trial of their workers on modest salaries, as big money passed through their hands. I wound up another charity fleeced by its founders.

But the ethos of charity is about benefit to others, not to investors, so private gain tends to be conspicuous. A charity Enron has yet to emerge - but if you know better, why aren't you talking to the Charity Commission?

There are two unwritten safeguards and I would take some convincing that beefing up regulation and inspection would do much more. The first is that charities are always of interest to somebody and questions are eventually asked. The second is that raising funds for charities is seriously hard work and if you want to make money there are far easier ways to do it.

Charity fraud should be punished vigorously and publicly. But it pales into insignificance, in my experience, compared with the waste of charity resources that results from the refusal to invest in proper management.

Clever people are allowed to hang up their business sense at the door of the trustees' meeting and accept propositions they would never normally countenance - they could be under-researched, under managed, understaffed, and amateur in the worst sense. As a way of wasting charitable funds incompetance has no equal, and unlike fraud, it is nearly endemic throughout the sector.

Another time I'll talk about some honourable exceptions.

Peter Cardy is chief executive of Macmillan Cancer Relief

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