Fraud

Half of charities believe fraud is a major risk to the charity sector, according to a report from the Fraud Advisory Panel.

Charities believe themselves to be vulnerable because unethical people exploit the sector’s presumption of trust and goodwill.

According to the report, most charity frauds take place at head office (18 per cent) or within the banking system (17 per cent) and involve the theft of cash (28 per cent) or cheques (23 per cent).

Almost half of victims know who committed their fraud. Typically it is a paid employee acting alone.

Frauds are most often discovered by internal controls or audits (46 per cent) or the bank (18 per cent).

The likelihood of fraud is highest among the largest charities (20 per cent have experience fraud versus 7 per cent overall), those that employ full-time staff (15 per cent compared to 3 per cent for organisations that have no full time paid staff) and those with trading subsidiaries (20 per cent).