Sarah Cox: Protecting your charity from fraud during the cost-of-living crisis

02 Nov 2023 Expert insight

In this piece Sarah Cox, MD at Ansvar Insurance looks at the forms fraud can take, and how charities can protect themselves...

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Fraud has always been a threat to businesses, charities, and individuals, but with the continuing cost of living crisis, and political unrest across the world, more people may be desperate or opportunistic enough to commit fraud. According to a government survey published this year, 24% of charities recorded breaches or attacks in the past 12 months

Charities may find themselves targeted by fraudsters, due to their kind nature and stretched resources, potentially making it easier for someone to infiltrate.  

Fraud can take many forms 

Fraud, for a charity, can take many forms, including devious grant applications, taking advantage of the services you offer when they don’t need them, embellishing the truth of a workplace accident or incident, posing as new or existing suppliers, taking payment for goods and/or services they have no intention of fulfilling.  

The first and most obvious impact of falling victim to fraud is financial, either the loss of income, or cost to the organisation, but there are arguably longer lasting and higher stake impacts to consider.  

Volunteers and staff may come under scrutiny in a fraud investigation, and the morale of members of your team could be damaged if they feel they are not trusted following a breach. Moreover, reputational fallout could impact the goodwill of supporters if a breach leads to negative coverage in the media. Good faith in your cause could be lost by existing and prospective donors. 

Luckily there are a few simple steps you can take to minimise the risk or impact of fraud to your charity, allowing you to focus on your charity’s mission. 

Know what you’re up against 

We know it’s obvious that cash-flow is key to the longevity of your charity, but this is just a reminder of how careful you need to be. Your drive to make a positive difference to the world through charitable work, may well be exploited for someone else’s gain. Protecting the assets of your organisation is paramount, including physical cash and online transactions; and keeping a critical eye open is key. 

Being aware of the risks you are exposed to will help you remain vigilant and mindful in every interaction and transaction you make as part of your work. 

Know your people 

From the first time you meet staff, volunteers, or suppliers, knowing who they are is integral to ensuring you have the right people around you. A robust screening stage not only for hiring staff and volunteers, but for reviewing grant applications and supplier quotes or tenders will help you create a team you can rely upon. 

Once you have your team, must ensure they are well-equipped to spot the tell-tale signs of fraud. Some very common examples to look out for, and a great first place to start are: spelling errors in emails or other correspondence, an unusual written or verbal tone that isn’t consistent with previous communications, or urgent or final notices for requests that come out of the blue. 

Carry out a risk assessment 

Creating a written risk assessment will help you visualise exactly where your most vulnerable areas are and what you can do to guard them. This written assessment is extremely important to complete, and if you don’t know where to start, then using a professional service is a great investment into the security and longevity of your cause. You may find Ansvar’s risk assessment guide for charities helpful. 

A risk assessment means you can hold and maintain accountability for protecting said risks, with the most suitable members of your team. It minimises any ambiguity and helps ensure all bases are covered. The people responsible will know where they stand and what responsibilities they hold. Consider having multiple people caring for the riskiest areas such as finances, which will help you catch anything that might fall through the cracks, or could be most exposed to internal fraud. 

At this point, it’s also worth noting that your health and safety records should always be comprehensive and up to date, to help reduce your risk of injury fraud. 

Insure to reassure 

You could do everything possible to help protect yourself from fraud and still fall victim. Choosing a comprehensive and suitable insurance policy is an extremely smart decision. Make sure you are aware of any exclusions, and that the insurance policy is right for your risk exposure. A good insurance broker will be able to help you find the right policy for your specific needs, so speak to them if you have any doubts at all. 

A robust policy will also help you to protect your charity, supporting the best practices which you’ve implemented. With these covered, you’ll be able to focus on the important work you do, safe in the knowledge that you are as protected as can be.

Sarah Cox is the managing director of charity and faith insurance specialist, Ansvar


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