A 2017 study by led by the University of Portsmouth’s Centre for Counter Fraud Studies places charity fraud at around £2.3 billion; the value of loss has increased by £400m in a year and from £1.1 billion in 2011.  Charities are operated by fundamentally nice people, who believe others within and supporting charities share their values and desire to deliver upon the objectives of the charities; the goodwill factor.  Understandably, charities are often blindsided by the goodwill factor when it comes to taking anti-fraud precautions, feeling that it undermines their values by appearing not to trust those who work with them.  Similarly, charities can be averse to investigation for the same reasons as well as embarassment and reputational damage.

Charities are understandably to reticent to spend valuable funds unless unnecessarily.  Charity trustees are obliged to protect their charities' assets and manage the affairs of the charity as if managing the affairs of another.  A smaller investment pre- incident can yield great benefit in terms of:

  • avoiding loss - losses are not only the amount lost to frausters, but will include staff time and accountancy, legal, investigatory and, if having to replace a staff member, any recruitment fees;
  • ensuring that the reasonable expectations of regulatory bodies of trustees are met,
  • meet grant-makers and funders expectations over reasonable financial management and asset protection, and
  • avoid the stress, embarassment and potential reputational damage of an incident.

We deliver services both pre- and post- incident:

Pre incident work examples

  • Training - often this can help spot the more obvious attempts at fraud, e.g. email payment fraud;
  • CC8 review - produced by the Charity Commission, this is checklist (the CC8) covers the basic controls charities are expected to have in place.  We have undertaken CC8 reviews and validated CC8 reviews undertaken by staff and trustees;
  • Internal controls reviews - often simple modifications to financial procedures can improve their effectiveness significantly;
  • Anti-bribery risk assessment - there is one defence for trustees in the Bribery Act - to be able to rely on it the organisation must have undertaken a bribery risk assessment;
  • Purchasing reviews - more than half of charity fraud is related to purchasing, e.g. contracts for donations, or single person purchasing (where one person can order, receive and pay for goods and services).  We help establish pragmatic, proactive purchasing procedures.

Post incident work examples

  • Investigation - we assist in determining the facts of what happened and how, e.g. where police simply note the incident and issue a crime number for insurance purposes;
  • Loss evaluation - losses do not always occur in one transaction, e.g. use of corporate card for personal purposes;
  • Lessons learned reviews - these are a simple means for organisations to address the issue which led to the incident;
  • Organisations also commission "pre incident" type work after they have experienced a fraud or identifiable instance of corrupt practice.