Almost half of charities were victims of fraud over the past year despite improvements in fraud awareness, according to new research. 

A survey of 139 UK charity leaders, carried out by the business advisory firm BDO and the Fraud Advisory Panel, found that 42 per cent of charities have been victims of fraud over the last 12 months.

This was despite improvements in fraud awareness among charities, BDO said, with 80 per cent of charities having one or all of the following policies: conflict of interest, whistleblowing, risk-register including fraud and anti-fraud.

Highlights from the 2024 Charity Fraud Survey, published ahead of the full report to mark Charity Fraud Awareness Week, show that just over half of respondents believed their financial investment in fraud prevention was enough to address fraud risks, up from 44 per cent last year. 

Just 37 per cent of charities said that over-reliance on trust may be an obstacle to fraud prevention, down from 57 per cent last year.

This year internal fraud was still prevalent, the survey found, with half of the charities that had experienced fraud over the past year saying that it was committed by staff, volunteers or trustees within the organisation.

More than two thirds of the charities that had been victims of fraud over the past 12 months experienced losses under £100,000 – 69 per cent up from 65 per cent last year.

But 10 per cent suffered a financial loss of up to £1m and 5 per cent reported total losses exceeding £1m.

The survey found that the most common type of charity fraud was the misappropriation of cash or assets by staff and volunteers, experienced by 40 per cent of the charities that had experienced fraud in the past year.

Payment diversion fraud, also known as authorised push payment fraud, was the second most common type, accounting for 33 per cent. 

The research also found that staff expenses fraud remains high, with 29 per cent of charities experiencing this over the past 12 months.

It adds that 85 per cent of the charities that had experienced fraud suffered a financial loss as a result.

Half of respondents expected their fraud risk to increase over the coming year, the survey found.

Tracey Kenworthy, counter fraud director at BDO, said: “While it’s encouraging to see the changes charities are implementing to both prevent and detect fraud, the persistent problem of insider fraud suggests more needs to be done.

“In the past, charities have been overly reliant on trust. Although our survey suggests that this is changing, the persistent problem of internal perpetrators highlights the importance of having robust internal controls and fostering an anti-fraud culture of openness and transparency.”

Sir David Green, chair of the Fraud Advisory Panel, said the findings “highlights the profound and long-lasting implications fraud has on charities of all sizes”. 

He said: “While there are positive and meaningful steps taking place to detect and prevent fraud, charities should not take their finger off the pulse when assessing fraud.”