5 November 2020 | Comment | Article by Roman Kubiak TEP

Protecting charities and the public: strengthening measures against fraud during the pandemic

The Charity Commission has warned trustees and donors to bolster their defences as it is worried that the global pandemic has created environments in the UK and abroad that are enabling charity fraud.

These concerns stem from recent figures published which indicate that charities have reported being victims of fraud or cybercrime 645 times since the start of the pandemic in March 2020. Charities have reported a loss of £3.6 million although the true scale could be much higher as it is thought that fraud is underreported. The Commission’s chief executive, Helen Stephenson, comments that the figures are “likely to just be the tip of the iceberg”.

The increase of virtual activities, working from home and remote sign-off processes, coupled with charities’ tendencies to place goodwill and trust in individuals, potentially heightens their vulnerability to fraud. In one instance, a fraudster used a beneficiary’s story of personal struggle during the current climate to pressure a charity into making a quick payment.

The economic impact of the pandemic many have faced may also have increased the temptation to commit fraud, particularly within charities themselves. Similarly, donors’ generosity could result in them becoming prime targets for cyber criminals and increase their susceptibility to fraud.

As such, the Commission has recently issued guidance to tie in with Charity Fraud Awareness Week, which ran between 19 to 23 October 2020. The guidance focused on charities improving their practices and procedures, as well as recommending vigilance for donors.

The three simple principles are:

1. Be aware of fraud

Vigilance and awareness are the buzzword; being a charity is no defence to fraud.

2. Take time to check

Emphasis is placed on knowledge of robust financial controls and counter-fraud by staff and volunteers. Challenging unusual activity and behaviour, no matter who is involved, is recommended as trust is exploited by fraudsters. Donors are strongly encouraged to check a charity’s registered number before donating.

3. Keep your charity safe

A strong counter fraud culture is encouraged, as is seeking professional assistance and not being afraid to report. Research by the Charity Commission found that 73% of charities impacted by fraud went on to change their internal controls and procedures.

There are numerous videos, case studies, factsheets, tutorials and webinars in the charity fraud awareness hub which is a must read for trustees, staff, volunteers and donors alike, in order to expand on the three principles above.

Author bio

Roman Kubiak TEP

Partner

Roman Kubiak is a Partner and Head of the market leading Private Wealth Disputes team.

He advises across the whole spectrum of private wealth disputes, with a particular focus on high value, complex and cross-border disputes including: trust disputes, breach of trust claims and applications to remove trustees; will disputes, particularly those with an international element; claims under the Inheritance (Provision for Family and Dependants) Act 1975; and claims for equitable relief under proprietary estoppel, constructive trusts and resulting trusts.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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