Fraud is on the rise and it’s estimated by the Annual Fraud Indicator 2017 to cost the UK economy £190bn per year. Charities are far from immune. Recent cases have highlighted the vulnerability of the sector. Jonathan Orchard, Partner at Sayer Vincent, has put together a five step plan to help your charity avoid the financial and reputational damage that fraud can wreak.
Accept that fraud exists
Organisations are estimated to be losing between 3 to 8 per cent of their income due to fraud – income that won’t get through to beneficiaries. Additionally, the impact of fraud on a charity’s work, beneficiaries and reputation can be hugely damaging, so the first step towards reducing fraud is to accept it exists.
Understand your own vulnerabilities
Charities need to think like fraudsters and really scrutinise their organisation’s weaknesses and vulnerabilities. There are common areas for fraud such as payroll and expenses, payment and procurement processes, fundraising and of course cyber risks –which must all be considered.
Given the scale of cyber risks, we advise that charities should consider what information they are putting in the public domain and how that information could be used in the wrong hands. For example, publishing important contact details such as finance personnel or the names of key suppliers or senior managers on their website. Having access to these contacts makes it easier for fraudsters to engage in phishing.
Build awareness and the right culture
Fraud risks should be openly discussed internally with trustees, staff and volunteers. There needs to be clear policies around fraud, bribery and corruption that everyone understands. To develop the right culture, employees need to understand what fraud and theft means to the charity, the responsibilities of staff in managing fraud, details of any whistle blowing plan or policy and crucially, how the charity will react to fraud.
To read the full Directory of Social Change article click here.
Source: Directory of Social Change