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Current fraud reporting ‘just the tip of the iceberg’, says Help for Heroes

25 Nov 2020 News

Fraud against charities is likely to have risen as a result of the coronavirus, Help for Heroes has warned.

Lucille Street, the head of risk and compliance at the charity, said that the fraud cases seen so far during the pandemic were likely to be “the tip of the iceberg” at a time of such economic uncertainty.

Street was speaking yesterday at Charity Finance Week, hosted by Civil Society Media.

'We will start to see more’

During a session to discuss how charities can protect themselves against fraud, Street said: “The current environment is a huge uncertainty for everyone. From an economic perspective, every charity is struggling to get funds in. We know that people are losing their jobs.”

She added that, while her own experience was that charity fraud has been at “a much lower level in recent months”, she also believed “that it is only the tip of the iceberg. We will start to see more”.

Vulnerable because of growth

Looking at the history of her own charity, Street said that Help for Heroes had initially been vulnerable to fraud because it had grown so quickly.

The charity started as a one-off appeal in 2007, run by two people and aiming to raise £3m. Since then, it has raised more than £400m.

Street said: “Back in 2009-10, after the charity had raised its initial £3m, money was still pouring in. It grew so fast that it had very few people in the background helping to support and set it up.

“I would say that controls were lax if not non-existent, and people were trying to do the best they could. They were all there putting their hands to the pump. But what I think happened is that the charity became overwhelmed.”

‘A high degree of naivety’

At that time, she added, Help for Heroes employed just 45 staff to manage an income of £45m.

Street said that the charity “had absolutely no dedicated fraud function”, adding that “there was also a very high degree of naivety.

“Everyone was thinking that everything was fine, that fraud would never happen to them; everybody was so generous and so kind and well-meaning, so why would we have a fraud function?

“But unfortunately, wherever there is money there is also fraud.”

Theft

In 2014, one volunteer fundraiser admitted to stealing £300,000 that was supposedly raised for Help for Heroes between 2009 and 2012. He spent four and a half years in prison for fraud.

Street said that the case was “highly damaging” to the charity's public reputation.

Trust among staff and volunteers “was absolutely smashed to pieces”, she said. In some cases, it took a full year to rebuild volunteers’ confidence in their colleagues.

Checks   

There has been “a dramatic change” in the charity’s work on fraud since then, Street said.

Asked whether Help for Heroes had introduced checks on staff and volunteers to reduce the risk of fraud, she said: “We do run checks now on our volunteers, which we did not used to do. That is probably the biggest change we have implemented.

“It does not stop everything, but it is a good barometer.”


Editor's note: References to checks on volunteers in this article have been amended, following clarification from Help for Heroes 

Charity Finance Week 2020 will take place online from 23 to 27 November. The theme of “turning crisis into opportunity” will explore the role of finance and IT leaders in guiding their charities through the pandemic and rebuilding for the future. Incorporating the Charity Finance Summit, the Charity Fraud Conference and the Charity Technology Conference, this is not an event to miss. Find out more here.

 

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