Insider Fraud - Charity Fraud Report 2024

Fraud poses a persistent challenge for charities, with insider fraud emerging as a significant threat, as revealed by the Charity Fraud Report 2024. Below, we provide a summary of key insights and actionable recommendations to safeguard your organisation.

Key Findings

1. Rise in internal threats
   1. Approximately 50% of detected frauds in charities are committed by internal members such as staff, trustees, or volunteers.
   2. Common types include misappropriation of cash/assets (42%) and fraudulent staff expenses (35%).
2. Financial and reputational damage
   1. 92% of charities reported financial losses due to fraud, with some losses exceeding £1 million.
   2. Beyond finances, 45% experienced morale loss among staff and volunteers, and 24% faced reputational harm.
3. Barriers to prevention
   1. Overreliance on trust and lack of fraud awareness are top contributors to fraud vulnerability.
   2. Many organisations also cite insufficient internal resources as a challenge.

Practical Steps to Mitigate Fraud Risks

1. Strengthen governance
   
   1. Regularly review internal controls and ensure governance frameworks are robust and enforceable.
2. Dual authorisation for transactions
   1. Require dual sign-off for financial approvals to reduce opportunities for unauthorised transactions.
3. Build awareness 
   1. Conduct fraud awareness training for staff and volunteers to recognize and report suspicious activities.
4. Invest in fraud prevention tools
   1. While resource constraints exist, neglecting prevention can lead to greater costs in the long-term. A small budget for fraud deterrence such as investments in systems or training can have a significant impact on safeguarding your charity.