Fraud reported by charities last year was the lowest in the last five years, according to the latest, fifth survey of the issue by the Fraud Advisory Panel – itself a charity – and the accountancy firm BDO. The fall is significant according to the survey organisers – coinciding with the tenth anniversary of Charity Fraud Awareness Week – because of the disruption that a single incident of fraud can cause any organisation, and charities may feel the pressure more than most, given their often-limited resources.
Most, 62 per cent of those responding to the survey agreed that economic challenges have increased the risk of fraud to their charity, while only 7pc of respondents disagreed.
The surveyors saw a positive reaction to the Economic Crime and Corporate Transparency Act, which introduces the new ‘failure to prevent’ fraud offence, with 79pc of those coming under the legislation taking action before it came into effect in September 2025.
Head of Fraud Advisory Panel, Matthew Field, said: “Marking the tenth anniversary of Charity Fraud Awareness Week and fifth year of the BDO Charity Fraud Survey with the highest number of respondents is a significant and incredibly positive milestone for the sector. Charities are becoming increasingly aware of the fraud threat and how to respond to it, with this campaign sitting as a driver behind this encouraging proactive stance.”
The Panel’s report noted that an over-reliance in a charity on trust was a barrier to fraud prevention. The report stated: “High-profile cases show that frauds can go undetected for years, especially internal frauds, where a fraudster has the means and the opportunity to manipulate friends and colleagues to conceal their actions.”
Figures
Some 34 per cent of the charities surveyed reported fraud or attempted fraud; lower than the 42pc of the previous year. Fewer than half, 45pc of fraud instances were reported to the police, lower than the 52pc of the year before. Some 13pc of those surveyed took no action about the crime; the same figure as the previous year. As for who carries out the fraud, broadly it’s a 50/50 split between insiders and outsiders; some 23pc of the fraudsters had no connection with the victim charity. Internal controls remain the most common means of detecting fraud. Like the previous year, the top three types of fraud were a combination of internal (misappropriation of cash or assets and staff expenses fraud) and external (payment diversion fraud, also known as APP or Authorised Push Payment fraud).
Comment
Tracey Kenworthy, Forensic Accounting Director at BDO, said: “Fraudsters are always adapting and finding new ways to target charities, but the sector’s awareness of the risks has improved considerably. While factors like changes in charity operations or new processes can influence fraud trends, it is essential for charities to remain alert and adjust to the evolving risk landscape.
“Charities must keep pace with emerging fraud trends to stay ahead of the increased threat to their assets and resources by effectively mitigating risks. The fact that nearly half (45pc) of leaders see an over-reliance of trust as a barrier to fraud prevention tells us that there is more to be done in protecting the future of the sector.”
You can read the 34-page report at https://preventcharityfraud.org.uk/document/charity-fraud-report-a-five-year-review-2021-to-2025/.
