Charity Fraud Awareness Week: Tips to Keep Your Charity Safe

There is always a small tingle of excitement when Fraud Awareness Week approaches – okay, I appreciate it’s not quite Christmas, or even Pancake Day – but as one of the few counter-fraud professionals that work in the charity sector it is exciting all the same!

It has been a genuine delight to see this event increase in impact and scale year-on-year, as it goes a long way to dispel the myth that ‘we’re a charity – so who’d commit fraud against us!’ Perversely the truth here is that charities are considerably MORE at risk, for a whole variety of reasons, but mostly due to an over reliance on trust.

Accountability vs Trust

Trust is the lubricant that keeps everything moving in charities and it is very important to remind ourselves that trust is not a control; and it does not replace accountability. The single biggest failing I have seen in countless investigations I have completed across the sector and across the world is lack of accountability, particularly supervision. If supervisors were to supervise – and not rely on trust – then a significant number of cases would be prevented before they happen. Particularly the big ones!

Fraud developing over time

You see, generally people don’t commit large scale frauds on day one – they build up to it, testing the water so to speak. If they then go unchallenged on something which in isolation appears innocuous enough and maybe easily explained away, then it only encourages them to test the boundaries further the next time – and please remember that a significant majority of fraud is committed by the charity’s own staff!

Management scrutiny – or lack of

Another significant enabler – I’m sorry to say – is the lack of awareness amongst senior managers, assuming that it will never happen to them. Now I completely understand that many charities do not have the resources for a dedicated role – indeed only four out of the 167k UK charities do – but that does not excuse having nothing in place at all. Some may have a ‘zero tolerance’ (whatever that means!) anti-fraud and corruption policy, but not many. Even fewer will have a response plan or reporting portal – but surely all should at least have some idea of what they will do when (not if) this happens to them…. it is clear in the media that the list of charities that have been stung in this way in increasing week by week, and no doubt with the benefit of hindsight, they’d have wished they took this risk more seriously

Areas to note

As well as the measures listed above, you should also ensure that you have some form of fraud awareness training for staff – however light touch – and also some form of reporting or even whistleblowing capacity. In many of the cases I’m dealt with other staff members have been aware, or at least concerned, before it all came out – but did not know how to raise this, or even worse, tried to but no one took them seriously.

Being prepared for fraud in a small charity is always going to be a challenge – and we are all lucky that there are organisations out there like The FSI that can provide valuable support – but it is important your plans are proportionate to the risks you undoubtably face, however low you believe that risk to be. No one want to be the next headline!

So I’m very keen to embrace the excellent initiative that the Charity Commission and Fraud Advisory Panel have provided us in Fraud Awareness Week, and lets use that to change the culture across the sector and collectively make ‘zero tolerance to fraud’ actually mean something

Dave runs Charity Fraud Solutions ( @Charity_Fraud) which provides dedicated counter-fraud services for the charity sector. Dave has been head of fraud for a number of large international charities, prior to which he was a senior detective in the City of London Police.