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One-third of fraud cases at charities may involve insiders, figures suggest

Charities should stay alert to the risk of insider fraud, a regulatory body has warned.

The Charity Commission said their figures suggest one third of fraudulent incidents against charities, reported to them during the financial year 2015/2016, were suspected to involve volunteers, staff or trustees.

Michelle Russell, director of investigations, monitoring and enforcement at the commission, said “it is crucial” those working or volunteering in a charity are fraud alert.

Charity box

“This means keeping an eye out for any suspicious behaviour or irregular activity and speaking out when they do have any concerns – and charities need to be robust in dealing with it if it happens,” Ms Russell said.

Highlighting how those who work in charities are generally “committed to making a difference in society”, she added: “They are trusting and trusted individuals.

“Unfortunately, for a range of reasons, that mutual trust can be abused. The reality is insider fraud does happen in charities.

“It might be an opportunistic crime made easy due to a lack of oversight or poor controls.

“It might be a more sophisticated pre-planned fraud, taking place over a number of years involving significant sums of money.

“Ultimately, whether it happens in a small charity with no employees or a multi-million pound household name, fraud diverts money away from those the charity is helping and who need it.”

The warning from the commission follows a number of recent high-profile incidents of insider fraud, including Robert Davies who was jailed for five years in July.

A former head of finance at Cyrenians Cymru, he pleaded guilty to defrauding the charity of over £1.3 million over six years, causing it to go into administration.

In a bid to urge those who work and volunteer at charities to stay alert to the issue and prevent the exploitation of vital funds, the regulator is advising they adopt a culture of practices that help minimise the risk.

This includes avoiding placing excessive degrees of trust and responsibility in particular individuals, and using appropriate financial controls, including dual authorisation.

Charities should also watch for unusual behaviour or lifestyle changes or regular unexplained cash withdrawals, and staff should be encouraged to speak out about issues or concerns.

The commission said clear procedures for reporting all frauds should also be in place.

Issuing an appeal for information about insider fraud from charities, including experience of incidents and views on existing and emerging threats, Ms Russell said details sent to them will help the commission to form a more detailed picture of the crime, how and when it happens and what can be learnt from it.

“Our aim is to help charities increase their own resilience to this kind of abuse and protect donors’ valued funds as well as protect public trust and confidence in charities,” she added.

:: For more information about the commission’s appeal for information on insider fraud visit

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