Charities lose millions to fraudsters throughout pandemic, study reveals

Charities and not-for-profit organisations lost a combined £8.6 million to fraud in the last financial year, the Charity Commission has revealed.

The figures were published during Charity Fraud Awareness Week, which launched on Monday.

According to the report, there were 1,059 separate incidents of fraud reported by charities in the year to March 2021 – but as fraud is underreported, the true scale of fraud against the sector is “believed to be much higher”.

A survey carried out ahead of the week-long event, aimed at raising awareness of charity fraud and illegal activity, also found that 65 per cent of charities feel the pandemic has increased the risk of fraud. This was attributed to the rise of remote working and virtual sign-off processes.

A further 53 per cent said the pandemic has made it more difficult to manage the risk of fraud within their charity, while three in five (60 per cent) said their financial investment in fraud prevention stayed the same, despite the increased risk.

Commenting on the report, Helen Stephenson, Chief Executive of the Charity Commission, said: “Sadly, as these figures we have released today show, there remain criminal individuals who would take advantage of organisations that seek to do good and of those that generously donate.

“Combating fraud gives the public confidence that their money is safe, protects vital funds for charities and more widely helps maintains trust in the charities we all care so passionately about.”

David Clarke, Chair of the Fraud Advisory Panel, added: “With fraud and cybercrime at record levels it has never been more important for charities to be aware of the risks and how they might be affected.

“As we emerge from the pandemic, charities need to recover and flourish without fear of fraud. Taking relatively simple measures can go a long way to protecting your charity and keeping it safe from harm.”

The Charity Commission is now calling on the sector to sign up to its new Stop Fraud Pledge by taking “six simple steps to protect their charity”.

This includes “appointing a suitable person to champion counter-fraud work”, “performing stringent checks and due diligence”, and “assessing each year how well fraud controls are working, what new risks there may be and what improvements are needed”.

Click here to learn more about the Stop Fraud Pledge.

For help and advice with related matters, please get in touch with our team today.

Posted in Charities.