Charity Commission launches anti-fraud initiative

28th October 2016 is a new website dedicated to helping charities in the fight against fraud. It provides an initial point of reference for Trustees, staff and volunteers who want to find out more about tackling fraud in their charity.

The launch of the new website not only marks the start of Charity Fraud Awareness Week (24-28 October), but is also a valuable tool for Trustees in the run up to Trustees' Week which runs from 7-11 November.

The website is an important resource for all those who are responsible for the internal management and governance of charities. Everyone involved in a charitable organisation should be vigilant when it comes to the risk of fraud taking place, but Trustees have ultimate responsibility for ensuring their charity is not mismanaged.

This has been a week of reports about fraud taking place in charities - a former premier league footballer was among four people charged with fraud in relation to their charity and a former Chief Executive of an animal charity in Northern Ireland has appeared in court on fraud charges - all of which serve as a timely reminder of the unfortunate relevance of this issue.

With estimates that between £150 million and £2 billion is lost in charity funds as a result of charity fraud in recent years, this is a topic that cannot be ignored by Trustees.

Trustees are required to report any incidents to the Charity Commission which have or could result in significant loss to the charity, their assets, reputation or beneficiaries under the Serious Incident Reporting regime. The Commission has also identified fraud and other financial abuse of charities as one of its priority risks areas and is likely to adopt a strong position on this as regulator.

Some of the Commission's key findings in its recent report into serious incidents highlight the impact of fraud on charties:

  • over a third of fraud incidents reported last year by charities were committed internally, so by staff, Trustees or volunteers
  • ut of 2,200 incidents reported to the Commission, 178 were classified as fraud
  • the biggest single fraud in a charity reported in 2015/16 resulted in a loss of £1 million.

The Commission's analysis of this subject found that often weak governance and poor financial controls, coupled with excessive trust in key individuals in the charity, were significant risk areas where fraud had taken place. The Charities Against Fraud website highlights specific examples of fraudulent activity in charities to demonstrate how easily this can happen and to help the Sector learn from the mistakes others have made.

The specialist Charity and Not for Profit team at Higgs advises the charities and not for profit / voluntary sector on all aspects of their operations and regularly delivers training on a wide range of operational, governance and other topical issues to Trustees and others involved with the sector. 

Higgs & Sons' 'Guide to being a Trustee' will be launched as part of National Trustees' week between 7-11 November. The Guide is a (straightforward) introduction to the key duties and responsibilities of Trustees and seeks to highlight the importance of good governance - another valuable resource for charities to make use of whilst carrying out their charity's work. Further details about how to access the Guide will be released soon, ahead of Trustees' week.

For more information on Higgs' Charity & Not for profit team click here.


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