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Fraud protection for charities

New research on behalf of the Charity Commission confirms that charities are increasingly aware of the risk of cybercrime, a term which includes phishing, malicious emails, hacking and extortion attacks on a charity’s data or systems.

Written by Paul Brown on 28th November 2019

Fraud protection for charities

New research on behalf of the Charity Commission confirms that charities are increasingly aware of the risk of cybercrime, a term which includes phishing, malicious emails, hacking and extortion attacks on a charity’s data or systems.

The findings are based on the largest-ever survey of charities’ attitude towards fraud and cybercrime, commissioned by the charity regulator, the Charity Commission. Over 3,300 charities took part in the survey which concluded that more than half (58%) of charities think cybercrime is a major risk to their sector and almost a quarter, (22%) believe cybercrime is a greater risk to the charity sector than other sectors.

In fact, there is no evidence that charities are at greater risk of fraud or financial crime than any other type of organisation. However, the report states that the risk of fraud in charities appears to be growing, "costing the sector millions and potentially billions of pounds each year”. The financial impact and the resulting possible reputational damage are a real threat to the ability of charities to maximise their return for the benefit of their causes and cannot be ignored. However, the survey found that only the larger charities are generally more likely to appreciate the risk of cybercrime and take action to prevent it.

Charites are also exposed to more traditional types of fraud and the Commission believes that charities are at particular risk of insider fraud as they tend to rely excessively on the goodwill and trust of single individuals, the research suggests over a third of those committing fraud were the charity’s own staff members, trustees or volunteers. Even still only a third (34%) of charities think their organisation is not vulnerable to any of the most common types of charity fraud with 85% think they’re doing everything they can to prevent fraud and almost half don’t have any good practice protections in place.

The Commission recommends some simple steps that charities could take to protect their funds, including introducing and enforcing basic financial controls. They should also make sure no single individual has oversight or control of financial arrangements, as effective segregation of duties is a crucial method of preventing and detecting fraud.


The Commission also suggests that employees, trustees and volunteers should be encouraged to whistle-blow when they see something they feel uncomfortable about.

Prevention is better than cure and robust risk reduction measures are paramount when addressing this risk. However, fraud and cyber liability insurance also have a significant role to play.

If you would like to discuss this matter and how you can protect your charity, then please get in touch with your usual Franklands contact on 01332 545720.

Source: https://www.gov.uk/government/news/over-half-of-charities-hit-by-fraud-knew-the-perpetrator-according-to-new-research

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