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Amy Laver

Posted 21 October 2019
by Amy Laver

Charity Fraud Awareness Week 2019 – It could happen to you

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Today marks the start of the Fraud Advisory Panel’s Charity Fraud Awareness Week and in the first of our series of articles focusing on fraud in the charity sector we ask…

Fraud – something that only happens to someone else…?

It is arguably a naïve and, perhaps, foolish trustee who thinks that because someone is employed by, or generous enough to volunteer their time and expertise to a charity, that they are not capable of committing fraud against the organisation. The Charity Commission publishes helpful guidance specifically aimed at trustees providing advice and information on how to spot the signs of such activity and inform appropriate authorities.

Charities can be attractive to fraudsters and other such criminals precisely because they rely on the honesty and kindness of the people who work for the charity, and there is a degree of trust and familiarity involved which may make those running the charity less suspicious. Charities who heavily rely upon cash-based fundraising activities are particularly vulnerable, not only to opportunists, but also those involved in more organised and sophisticated operations.

However, the impact of such crime on a charity is not just financial. Trustees, staff and volunteers will all be affected, and it is likely to bring with it adverse publicity, and maybe even damage to the reputation of the charity with its donors, beneficiaries and the public generally. It is therefore important that trustees have proper procedures in place for dealing with this type of incident and for reducing the risk of such events happening.

Trustees have a legal duty and responsibility to protect charity funds and property in order that it is used appropriately for the benefit of those it serves. It is impossible for a charity to be run in such a way that it is immune from this type of crime, but there are effective measures which can be implemented in order to minimise the risks (look out for our ‘top tips’ later this week).

It is also important to remember that fraud and financial crime can also happen at trustee level. The Charity Commission recently disqualified a trustee and ordered them to pay back £200,000 in funds and interest to their charity, the Nottinghamshire Miners Home, and its subsidiaries. The trustee in question had benefitted from £150,000 in private building works through fraudulent invoicing. The Commission also held that the trustee and 2 others were responsible for mismanagement of administration in the charity. The trustee had previously been prosecuted by the Serious Fraud Office and found guilty of 14 counts of theft. This resulted in the charity being removed from the register.

For more information on managing risk please contact our specialist charities’ team on 01392 207020. 

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About the author

Amy Laver

Amy Laver

Associate and Solicitor

An associate in the corporate and charities & social enterprises team