The Charity Commission's chief executive, Helen Stephenson, has warned that many instances of fraud within the sector currently go unreported.
Speaking at the launch of Charity Fraud Awareness Week, Stephenson said that fraud can have a “devastating” impact on voluntary organisations and urged greater reporting of the crime when it occurs.
She said there was no evidence that charities were more likely to be targeted by fraudsters than other organisations but suggested that the effects could be worse than in the private or public sectors.
“It can jeopardise crucial services that charities provide but it can also cause reputational damage, both to public trust and confidence in charities but also to donors and it damages morale of staff and volunteers.”
But Stephenson said the Commission’s research showed that about a third of incidents reported to it were regarding fraud originating within charities by their staff, trustees or volunteers.
She said the Commission was promoting strong governance and financial controls within charities to combat this but said greater reporting of fraud would help the regulator be more effective.
“Timely reporting is essential because it shows the charity is dealing with the issue appropriately and they are going to get back on track. But it will also help us to spot patterns or issues in frauds that are being undertaken. We are then in a better position to regulate the sector as a whole.”
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Fraud experts
Dave Carter, head of counter fraud management at the British Council, was also speaking at the event where he said that charities need to be more aware of the risks.
He highlighted that he is one of only “four or five” staff across the sector, naming MacMillan and Oxfam as two of the other charities to employ a similar role.
“There are so few of us. There are 160,000 charities in the UK, how many do you think have a head of counter-fraud, or a counter-fraud function? Less than a handful. About four or five.”
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