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Charities unprepared for fraud
New research released by the Fraud Advisory Panel has found that charities are unprepared to fraud; and that 60% have no significant anti fraud policies or procedures in place. This is despite 50% of the charities surveyed recognizing that fraud is a major risk.
The research surveyed charities with an income of £10,000 so includes smaller charities, where fraud can have a much bigger impact. Charity fraud can result in cancelled projects and has an adverse effect on staff morale, as well as the obvious financial impact which occurs. Furthermore, it is believed that charities are more susceptible to fraud because of their culture of reliance on goodwill and trust.
Although only 7% of charities surveyed had been a victim of fraud, there are worries that without formal fraud procedures, it becomes much more difficult to detect and prevent fraud, as well as dealing with the consequences.
Charity fraud can take many forms, from internal fraud and staff theft through to CNP fraud. One current trend is for fraudsters to test stolen cards by donating small amounts of money to charities online. This can cause headaches for the charities who have to deal with the subsequent chargebacks, and the costs and administration time this takes.
Ros Wright, Chairman of the Panel and a former Director of the Serious Fraud Office, commented on the research, saying:
Charities that have avoided the attentions of fraudsters need to learn lessons from those which have not been so fortunate. Just over half of the charities that have already fallen victim to fraud now think, in retrospect, that they contributed to the fraud taking place by being too trusting or having inadequate internal controls.
The full research, along with a wealth of resources to help prevent fraud can be found at: http://www.fraudadvisorypanel.org/
24th February 2009
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