Third Force News recently reported on the outcome of a seven year Charity Commission investigation into 30 charities which found that a ‘gang of criminals’ had managed to defraud grant giving bodies such as The Big Lottery Fund, Comic Relief and Children in Need, to the tune of over £500,000. So, it seems no charity is too big to escape the risks of fraud, externally and internally. The article caused us to consider what steps a charity (or indeed any organisation) should be taking to minimise the risk of fraud. We think this all the more pertinent when one considers that the National Fraud Office’s Fraud Indicator 2011 suggested that the charity sector loses £1.3 billion a year to fraud.

The starting point for any charity considering its risks of suffering from fraudulent activities is to look at its own procedures, to assess where the weak points are and to address these. Just some of the questions which a charity may wish to consider are:-

  • to what extent can a person within your organisation spend its money or use its assets without some sort of authorisation?
  • if your charity is a grant making organisation, what due diligence do you carry out before making a grant offer?
  • what steps are taken to ensure the money has been spent as set out in the application?
  • what internal procedures are there for reporting a suspicion of fraud?

The Charity Commission has produced a useful self-assessment checklist which we would recommend every charity consider and apply in a proportionate way to suits its own circumstances.

The checklist can be found here

The article by Third Force News can be found here