Close up of a person's hand at a computer keyboard

Top Tips to Prevent Charity Fraud

Published: 29/10/19 | Categories: Information & support, Author: Mair Rigby

Last week was Charity Fraud Awareness Week. Mair Rigby, Governance and Safeguarding Manager at WCVA, follows up the week’s events with some some top tips for preventing fraud.

Do you know how to prevent fraud in your charity?

Fraud is a serious risk for all organisations, including charities. As well as causing loss to a charity, fraud can damage its reputation and affect the morale and confidence of staff and trustees.

Fraud is dishonesty, involving either:

  • false representation, for example identity fraud
  • failing to disclose information
  • abuse of position to make a gain or cause loss to another

Fraud can be hard to detect and very sophisticated, and charities can be viewed as a ‘soft target’ by criminals. This means that it’s incredibly important for charities to put into place strong defences to minimise the risk of fraud happening to their organisation.

Most people are aware of the risk of external attacks, but sadly many charities have experienced ‘insider fraud’ when the risk comes from within, so you also need to be vigilant about the potential for fraud being committed by trustees, staff, volunteers and fundraisers.

International Charity Fraud Awareness Week seeks to encourage and empower charities to talk about fraud and share best practice both online and offline.

So why not start by signing up to the free Charity Fraud Awareness Week Hub where you can find webinars, resources, and help sheets?

Top Tips for Fraud Prevention

  1. Financial controls – Make sure you have robust financial controls in place and that procedures are followed.  Are records being kept? How many signatories are on the bank account? Who authorises payments? This information sheet shows you how to create a financial controls policy.
  2. Training and Awareness – Get training, or do some awareness raising activities about fraud with your trustees, staff, and volunteers. WCVA or your local CVC can help with training, or there are lots of free resources on the Charity Fraud Awareness Hub.
  3. Fundraising – Make sure you know what fundraisers are doing on your behalf. Remember, charities are responsible for monitoring their fundraising activities. Make sure you keep records and have proper written agreements in place with any fundraisers. Make sure you know where donations are coming from and that your staff know how to recognise any suspicious donations.
  4. Whistleblowing – Make sure that everyone feels able to report any suspicious behaviour and knows who they should tell if they do suspect something. Many charities have fallen victim to fraud because they had an overly trusting culture, so make sure people know it’s good to report, even if their suspicions turn out to be unfounded. Create a whistleblowing policy, put up some posters around your building and talk about it at staff meetings.
  5. Cybersecurity – Cybercriminals are becoming increasingly sophisticated.  Here are ten simple steps you can take to improve your cybersecurity. Consider doing the Cyber Essentials self-assessment to check your systems are secure.  Watch out for ‘CEO fraud’ when criminals impersonate senior members of staff to try and persuade people to make ‘urgent’ payments!
  6. Safer Recruitment – How well do you know your staff and volunteers? No one wants to think that the people they work with might not have the best interests of the charity at heart, but as the cases of ‘insider fraud’ show, sadly this is sometimes the case. Make sure you have a recruitment policy, ask for references and to see original ID and qualification documents. Carry out any appropriate background checks and make sure people are being supervised in their roles. Read this help sheet on Getting to know your staff and have a look at our resources on Employing and Managing People.

You might have some work to do, but remember, it’s far better to be proactive and put fraud prevention systems into place, than to suffer the consequences of an attack on your charity!

If the worst does happen, make sure you report it to the relevant authorities such as the police and Action Fraud and make a serious incident report to the Charity Commission.