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Five steps to protect from charity fraud

Covid-19 has seen a rise in fraud and cybercrime against charities, so it’s crucial to be informed and aware of the dangers. Here, we share some tips on how charities can become fraud aware and remain safe online.

1. Review existing financial procedures

Key to managing the risk of fraud is to make sure that proper financial controls are in place. The pandemic has led to an increase in remote working and virtual activities and sign-off processes, which may make existing financial procedures vulnerable to fraudulent activity. Now is a good time to conduct risk assessments to spot any weaknesses in current financial controls and review systems which may be susceptible to fraud. Following the review, you can put in place new controls or tighter procedures to mitigate the threat.

2. Have good oversight of your accounts and finances

It is much easier to spot fraudulent activity if you have control and oversight of your accounts and finances. Access to sensitive areas of financial activity should be tightly monitored. Particular areas to focus on include:

  • the segregation of duties. Avoid too much trust and responsibility being placed in one individual
  • controls over cash, including banking arrangements and payments whether in the form of cheque, internet or online and use of credit or debit cards. There should be limits as to what individuals can do and change depending on their authority
  • changes to supplier details. Thorough checks should be made on any requests and multiple authorities should be required to approve any changes.

Establish reporting systems and advise your trustees, management and administration teams on the signs of fraud that they should be looking out for.

3. Beware of scams

Cyber fraud is becoming increasingly common, with fraudsters impersonating people and organisations to trick you into believing they are genuine.

If you receive a request to change supplier bank details, make an urgent payment, or provide financial information, stop and check it out before you action the request. Train staff on how to spot potentially fraudulent requests, to be always alert and to proactively look out for anything they think is suspicious.

4. Monitor who is fundraising in your charity’s name

Be alert to people setting up company names or website addresses similar to your organisation’s name or website with a view to fundraising for money or goods for your charity, but really for themselves.

5. Protect your charity from internal fraud

Did you know charity fraud is most often committed from within? One way to protect your charity against fraud by a volunteer/employee is Fidelity Guarantee Insurance. This is cover which protects your organisation against the loss of money and/or property which you may suffer as a result of a dishonest or fraudulent act by an employee or volunteer. For more information, please click here.

If you have any queries or concerns about charity fraud, please contact a member of our charities team.


Charity Newsletter Winter 2020