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Commission investigates theft and fraud totalling £21m

Governance | Tania Mason | 22 Sep 2010

The Charity Commission received 451 reports of serious incidents last year, almost twice as many as the year before.

And the value of all theft and fraud reported to the Commission totalled £21m.

Yet the Commission believes there are many more such examples of fraud occurring that are not being reported.

In the third annual report detailing the work of the regulator’s compliance unit, the Commission wrote: “For the first time we can report that the total value of the fraud and theft reported to us, through reporting serious incidents and whistleblowing reports, was £21m against a total income of £1.74bn for these charities.

“While this represents a relatively small proportion of the income of the entire charity sector (£53.4bn) our view is that there is significant under-reporting in this area.”

During the year the Commission opened 2,434 new assessments and completed 2,615 assessments.  This compares with 1,504 assessments opened and 848 closed in the previous year. The increase was largely due to the regulator’s “proactive monitoring work” which identified, through cross-matching data on charity trustees with other regulators and agencies, 940 trustees who were disqualified from taking on the role, usually because they were an undischarged bankrupt or disqualified as a company director.

Some 180 of these assessments went on to become the subject of an investigation, and nine of those were deemed serious enough to warrant a statutory inquiry.  During 2008/09 the Commission opened 168 investigations, of which 19 were statutory inquiries.

The total income of all charities subject to an assessment last year was £13.9bn, almost 25 per cent of total sector income.  The Commission was required to directly monitor £521m of the sector’s income through either statutory inquiry or regulatory compliance cases, and directly protected £29.5m of charity assets at risk through those investigations.

The report, called Charities Back on Track 2009/10, says that while only 180 cases were subject to investigations opened by the Commission during the 2009/10 financial year, “we are still seeing too many basic mistakes”.

Kenneth Dibble, executive director of legal services and compliance, wrote: “The Commission remains concerned at the number of charities put at undue risk of abuse or harm as a result of weak governance and poor management.”

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