More than 645 charities have become a victim of fraud during the coronavirus pandemic, a major study has revealed.
The figures were published by the Charity Commission for England and Wales during Charity Fraud Awareness Week – the annual event designed to help not-for-profits strengthen their defences against crime and fraud.
According to the report, hundreds of criminal attacks against charities have cost the sector some £3.6 million in losses since the start of the pandemic in March.
However, the “true scale of fraud against charities is believed to be much higher, as fraud is known to be underreported”, said the Charity Commission.
So, why is charity fraud increasing?
The regulator believes that remote working, and the resulting virtual activities and sign-off processes, is enabling an environment beneficial to criminals.
Fraudsters may also be extorting charities’ “tendencies to place goodwill and trust in individuals”. The Charity Commission highlights one example where a criminal used a story of “personal struggle” and financial hardship to pressure a charity into making a payment without carrying out the usual checks.
Fraud can be defended against with the correct financial controls, however. According to the regulator, two thirds of frauds are picked up by financial controls or audits, meaning simple checks and controls, together with a strong counter-fraud culture, can be “key to disarming fraudsters”.
Speaking at the 2020 Charity Fraud Awareness event, Helen Stephenson, Chief Executive of the Charity Commission, said: “We are seeing evidence that opportunists may be taking advantage of charities during the pandemic and I urge all charities to be extra vigilant against fraud.
“This comes at a time when charities are a lifeline for many people suffering from Covid-19, and the wider impacts of the pandemic – charities have been at the forefront of responding to the crisis, and many have also been placed under severe financial strain. As our country faces another challenging point in the crisis, we cannot afford for charitable work to be disrupted by criminals.
“When fraud hits charities, its impact is felt far beyond the balance sheet – it is people that are let down, often hard-working volunteers or people in desperate need. That’s why I’m urging all trustees to take action now, to protect their charity’s valuable funds and assets.”
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