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All organisations need to be aware of the dangers of charity fraud. This is because charities can be particularly vulnerable since they tend to have high cashflow and are often manned by volunteers who may not be trained to spot anomalies.

Charities can fall victim to fraud from both external and internal thieves. In many instances, the damage is irreparable to their finances or to their reputation. In this way, you must take steps to safeguard your operations. With Charity Fraud Awareness Week around the corner (19 to 23 October) here are our top tips to combat charity fraud.

Examine your financial procedures

Prevention is better than reaction. Charities should ensure they have sound financial controls in place is vital! The pandemic has seen an increase in virtual activities for many groups and this has included sign-off processes. This has led to points of vulnerability that should be addressed as soon as possible. You should carry out thorough risk assessments and implement tighter procedures put in place to mitigate risks.

Establish good oversight of your finances

Tight control and oversight of your accounts and finances will allow you to spot any red flags and unusual activity. Be conscious to avoid putting too much responsibility on one person within your organisation. It is important to establish limits upon how much money any individual can handle within your organisation and to make thorough checks upon any internal requests to change suppliers. Multiple authorities should be required to approve any changes like this. By setting up reporting systems as a matter of course you will make it harder for a fraudster to operate unseen.

Who is fundraising in your charity’s name?

Sadly, some fraudsters will set up websites or fundraising pages as copycats in order to raise money in the name of your charity which they then keep for themselves. Carry out regular searches and monitoring sessions for such activity and act upon it if you find suspicious goings-on.

Beware of scams

Scammers now target charities using increasingly sophisticated pitches. It is therefore vital to be on your guard against any request to make an urgent payment or provide any other financial information. If you suspect you are being scammed, end the call and make your own enquires before you action any request. Clearly, it is important to train all your staff to spot signs of a scam and to carry out this same procedure.

Insurance against internal fraud

Charities tend to fall victim to actions from internal thieves. They can take out Fidelity Guarantee Insurance to guard against fraud by a volunteer or employee. This cover protects your organisation against the loss of money or property as a result of a dishonest or fraudulent act from within.

Fraud can have a devastating effect on a charity. Remember to stay vigilant in protecting your organisation especially over Charity Fraud Awareness Week.

For detailed professional advice on this matter, please contact us today.