Fraud among charities up £400m; cost on charities over £2bn

Fraud among the charity sector has risen by £400m over the year, costing charities approximately £2.3bn, estimates from a new fraud report have shown.

According to the Annual Fraud Indicator 2017, published by the UK Fraud Costs Measurement Committee and based on research from Crowe Clark Whitehill, Experian and the University of Plymouth, found procurement fraud rose to almost £1.2bn, payroll fraud to £990m and grant fraud to £161m.

Although the report claims there is no official procurement expenditure data for the charity sector, the levels were estimated by its payroll costs and grants from the total turnover figure.
In 2016, fraud in registered charities stood at just under £1.9bn, showcasing a rise of £400m over the year to an estimated £2.3bn.

Last month during Charity Fraud Awareness Week, the Charity Commission warned a third of all charity fraud abuse is reported from within a charity, highlighting the scale of misuse of charity funds from within the charity itself.

Charity Commission chief executive Helen Stephenson said research by the Commission has found a third of fraud among charities is likely to have been perpetrated by trustees, staff or volunteers of charities.

“We undertook some research into a sample of organisations who reported fraud to us, and a third of those were internal, meaning they were frauds originating from within the charity itself, perpetrated by trustees, staff or volunteers,” she said.

“That’s why we’re working together with the wider sector to protect charities and donors. It’s not just people from the outside reporting issues. It is sadly people from within charities that are prepared to misuse charity funds,” she added.

Stephenson said the highest loss reported to the Commission was £1 million and that fraud originated from weak financial controls and poor governance. “Those were the contributing factors in most of the cases we reviewed."

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