Protecting your charity from Fraud

Updated: Oct 20

Sarah Cox, Managing Director of Ansvar


The cost-of-living crisis has many people struggling and feeling desperate to boost their income, and some who have other motives to take advantage when they can; both camps could resort to committing fraud to get ahead, even if that means targeting a charity. Unfortunately, there are people in the world who will resort to highly unethical means in order to get what they want, and charities could easily find themselves a target.


Fraud can take shape in different ways, whether that’s in the form of a devious grant application, embellishing the truth of a workplace accident or incident, or people posing as suppliers in order to take payment with no intention of supplying the goods or service paid for.



Fraud isn’t just about money

The loss of income or funds is often the first and most obvious thing that springs to mind when you think of fraudulent activity, but there are perhaps more catastrophic and longer-lasting impacts to different facets of your charity. For one, consider how your volunteers and staff might feel if they come under scrutiny in a fraud investigation; the morale of the most honest members of your team could be shattered and irreparable if they feel you don’t trust them.


It’s also worth remembering how harsh the media can be, and how stories can be twisted no matter how sensitively the situation is handled. The PR fallout could cost you goodwill for a long time to come.

Luckily there are a few simple steps you can take to minimise the risk or impact of fraud to your charity, allowing you to focus on your contribution to society.


Know what you’re up against

Remember how important the proper protection of your assets is, including physical cash and online transactions. We don’t need to tell you how important cash-flow is for your charity, but we will remind you how careful you need to be. Remember, just because you’re a charity, doesn’t mean you aren’t at risk of being exploited for someone else’s gain.


Being aware of the risks you are exposed to will help you remain vigilant and mindful in every interaction and transaction you make, which is a huge part of protecting your charity.


Know your people

Right from the start, you should ensure you have the right people on-board. A robust vetting stage not only for hiring staff and volunteers, but for reviewing grant applications or supplier quotes will help you create a team you can rely upon.


Once you have your team, you should spend time training them on how to spot the tell-tale signs of fraud, such as common spelling errors, unusual written or verbal tone that isn’t consistent with what they’d expect from whoever they are communicating with, or urgent or final notices for requests that come from out of the blue, are some of the main ones to note.


You should also keep an eye out for insider fraud, which is at a higher risk for charities, often due to high levels of trust. The Charity commission recommends establishing strong financial controls and developing adequate segregation of duties. It has produced guidance – ‘Internal Financial Controls for Charities’ (CC8) – to promote the right environment of prevention - risk awareness and oversight - and remedies to encourage staff to take prompt and proportionate action.


Carry out a risk assessment

It’s a great first step knowing your risks off the top of your head, however, getting a risk assessment written up will help you visualise exactly where your most vulnerable areas are and what you can do to guard them. If you don’t know where to start, using a professional service is a great investment into the security and longevity of your cause, and you may find this page on our website helpful to get you started.


A risk assessment will also help you maintain accountability with the most suitable members of your team. Everyone will know where they stand and what responsibilities they hold, with multiple people caring for the riskiest areas such as finances, which will help you catch anything that might fall through the first net.

You should also ensure you have a comprehensive and up-to-date health and safety record for your team, to help reduce your risk of injury fraud.


Insure to reassure