The Charity Commission has warned charities to be alert to suspicious large donations following information from the Serious Organised Crime Agency that several charities have unwittingly been involved in a credit card scam.

According to Michelle Russell, head of investigations and enforcement at the Commission, the scam involves a fraudster telling a charity that they will be donating a large sum of money on the condition that the charity sends half of the donation onto another specified charity that is in fact the personal bank account of the fraudster.

The initial payments are made using a compromised or stolen credit card. Once the credit card company realises that the card has been compromised it recalls the full amount, but by then the charity has already passed half the donation on to the other “specified charity” – the fraudster’s own account.

The charity has unwittingly been involved in money laundering.

Russell urged charities to be alert to unusual features of unsolicited donations, such as unusually large amounts, conditions or complex banking and transfer arrangements, or a donation which in reality is some kind of loan.

She said: “Fraud is a real threat to charities of all sizes – the National Fraud Authority’s 2013 Annual Fraud Indicator report shows that nearly one in ten charities with income over £100,000 have reported they have been the victim of fraud in the last financial year. Whilst this year’s report only sampled charities with income over £100,000, this is not to suggest that smaller charities do not experience fraud, as we know they do.

“It is vital that all charities, whatever their size, do not become complacent and ensure they have financial controls and policies in place to both prevent fraud occurring, and deal with it when it does happen. Most donors are honest and genuinely want to help charities, but we need to be vigilant and stop the fraudsters.”

Charities should be especially wary of situations such as:

• unusual or substantial one-off donations or a series of smaller donations or interest-free loans from sources that cannot be identified or checked by the charity
• where a charity is asked to act as a conduit for the passing of a donation to a second body which may or may not be another charity
• if conditions attached to a donation mean that the charity would merely be a vehicle for transferring funds from one individual or organisation to another without the trustees being able to satisfy themselves that they have been properly used
• where a charity is told it can keep a donation for a certain period of time, perhaps with the attraction of being able to keep any interest earned whilst holding the money, but the principal sum is to be returned at the end of a specified, short, period
• where donations are made in a foreign currency, and again unusual conditions are attached to their use, eg including a requirement that the original sum is to be returned to the donor in a different currency
• where donations are conditional on particular individuals or organisations being used to do work for the charity where the trustees have concerns about those individuals or organisations
• where a charity is asked to provide services or benefits on favourable terms to the donor or a person nominated by the donor