Like any other sector, charities are not immune to criminal abuse from fraudsters.

Fraud is dishonesty, involving either false representation (eg ‘identity fraud’), failing to disclose information or abuse of position, undertaken in order to make a gain or cause loss to another.

Fraud is the most reported crime in the UK. According to the Office for National Statistics, an individual in the UK is ten times more likely to be a victim of fraud than theft. The charity sector is no different. Although estimates of the scale of charity fraud in recent years have varied between nearly £150 million and almost £2 billion per annum, it is clear that the loss to fraud has a significant impact on the good work that charities do. In 2015, the National Crime Agency noted that “…. Individuals, the private sector and the charity sector lose billions of pounds each year to fraud” (source: UK National Risk assessment of Money Laundering and Terrorist Financing).

• Internal fraud (for example by employees and volunteers)
• External fraud (for example some of the financial impact that fake or sham charities have on legitimate charities)

Fraud is a criminal offence and therefore a matter for the police. Trustees should report any fraud in their charity to the police immediately, and also to the Charity Commission, under its dedicated reporting facility at [email protected].

You should report an incident if it results in, or risks, significant loss of your charity’s money or assets, damage to your charity’s property or harm to your charity’s work, beneficiaries or reputation.

When reporting to the Commission, you should state what happened, the nature of the risk and the steps you’re taking to deal with the incident.

For detailed guidance on reporting serious incidents in your charity, see How to report a serious incident.

The charities regulator will:

1. consider whether the criminal activity indicates there has been mismanagement in the charity
2. decide whether it needs to act to protect charity property
3. make sure trustees are dealing with any incidence of fraud responsibly and are taking appropriate steps to ensure that the charity is better protected so that it does not happen again