HCR Law Events

15 October 2021

What can you do to protect your charity from fraud?

Charity Fraud Awareness Week (18-22 October) aims to raise awareness of fraud and cybercrime and create a platform for people working in the charity sector to talk about these issues and share good practice. The campaign is run by a partnership including charities, regulators, law enforcement officers, and other not-for-profit stakeholders around the world.

But what can you do to prevent fraud in your own organisation?

All charities, NGOs and not-for-profit organisations are susceptible to fraud and can be targeted. Given the current pandemic, now more than ever, charities need to be fraud-aware and take steps to protect their money, people, and assets from harm.

The Charity Commission has offered the following guiding principles on tackling charity fraud:

  • Fraud will always happen and being a charity is no defence. Even the best prepared organisations cannot prevent all fraud.
  • Fraud threats change constantly. Fraud evolves continually, and faster, thanks to digital technology. Charities need to be alert, agile, and able to adapt their defences quickly and appropriately.
  • Prevention is far better than cure. Financial loss and reputational damage can be reduced by effective prevention. It is more cost-effective to prevent fraud than to investigate it and later remedy the damage done.
  • Trust is exploited by fraudsters. Charities rely on trust and goodwill, which fraudsters will try to exploit. A strong counter-fraud culture should be developed to encourage the use of fraud prevention controls and a willingness to challenge unusual activities.
  • Discovering fraud is a good thing. The first step in fighting fraud is to find it. This requires charities to talk openly and honestly about fraud. When charities refrain from doing so, the only people who benefit are the fraudsters themselves.
  • Report every instance of fraud. The timely reporting of fraud to police, regulators, and other agencies is fundamental to strengthening the resilience of individual charities and the sector as a whole.
  • Anti-fraud responses should be proportionate to the size of your charity, activities, and fraud risks. The vital first step in fighting fraud is to implement robust financial controls and get everyone within the charity to sign up to them.
  • Fighting fraud is a job for everyone. Everybody involved – trustees, managers, employees, volunteers, beneficiaries – have a part to play in fighting fraud. Trustees in particular should manage fraud risks actively to satisfy themselves that the necessary counter-fraud arrangements are in place and working properly.

Further detailed information can be found here – whether you’re a trustee, director, staff, volunteer, auditor, solicitor, insurer, regulator, law enforcer, policymaker, or other interested party, please get involved and learn more about protecting your charity from fraud and cybercrime.

Three ways to get started, include:

1. Getting involved in Charity Fraud Awareness Week
2. Use (and share) free online resources (as above)
3. Take the counter-fraud pledge

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About the Author
Virginia Henley, Partner, Head of Charities

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