Taking a position as a trustee, treasurer, director or worker at a charity brings with it a lot of responsibility, much of which is carefully enshrined within the law.
The third sector has a robust system of checks and balances to ensure that organisations, their advisors and regulators can spot and take action against financial impropriety – and yet the system is still abused for personal gain.
One of the more recent cases of theft from a charity involved charity treasurer Dale Hicks who was jailed for three years after stealing more than £330,000 in Gift Aid.
Mr Hicks used his position as a treasurer at Staffordshire-based ex-offenders’ charity, Life Keys, to create many false Gift Aid claims.
The money claimed from Gift Aid between 2014 and 2016 was diverted into his bank account. Throughout this period, the charity, which helps to rehabilitate prisoners, was unaware of Mr Hick’s activities.
However, trustees soon became suspicious when large sums started arriving into the charity’s accounts before they were moved on. Mr Hicks attempted to cover up for the inconsistencies but was asked to leave the voluntary role in 2016 and was removed as a signatory from the charity’s accounts.
However, not wanting to lose out on his source of income it is understood that he forged the signature of one of the trustees in an attempt to switch the account the Gift Aid was paid into to continue his fraud.
It is understood that a subsequent investigation by HM Revenue & Customs (HMRC) uncovered more than £270,000 had been claimed by Mr Hicks, while a further £62,000 in claims was withheld during the investigations.
Further enquiries showed that Mr Hicks had enjoyed cruises and other holidays worth up to £76,000 during these two years and made card payments of up to £153,000 on various things, despite being unemployed.
Mr Hicks was subsequently jailed at Stoke-on-Trent Crown Court, after pleading guilty to fraud, using a false instrument and using a false instrument with intent.
Unfortunately, the charity failed to spot the signs that something was wrong for two years, despite Mr Hicks posting evidence of his trips on social media and uploading videos of his travels.
Trustees and managers often do not want to suspect that volunteers or staff members are acting illegally, but this case highlights some of the clear warning signs, such as:
- The moving around of large sums of money within a charity’s accounts
- Excessive spending beyond a person’s means
- An overly defensive attitude towards allegations
- An avoidance of key meetings or provide documents
As the spotlight is constantly being shone on the fundraising and financing of charities, trustees must take their responsibilities seriously. They should, where reasonable, monitor the spending habits of people in a position of financial responsibility and query any unusual bank transfers or claims for Gift Aid or any other form of funding that has not been discussed previously with trustees.
It is important to remember that in cases such as these the charity and its trustees may be found personally liable for the theft and events such as this can do substantial reputational damage that can affect an organisation’s ability to fundraise for many years.
If you are concerned that your charity is at risk of fraud, why not contact us for help.