‘Be bold in tackling fraud’, say CFDG, in the light of NFA’s sobering £1.3 billion estimated cost
27th January 2011
The latest figures in the National Fraud Authority’s (NFA) Annual Fraud Indicator show that no area of society is immune from the danger of fraud, including charities. The report quantifies the cost of fraud to the sector as £1.3 billion, representing around 2.4% of the total charity sector turnover.
CFDG is pleased that the NFA is helping to raise awareness of fraud by publishing this figure, which is their first accurate estimate of fraud’s cost to the charity sector. CFDG have been engaging with the NFA on the issue of fraud and have raised the topic with banking representatives through its Banking Forum.
Caron Bradshaw, CFDG’s CEO, commented:
‘While the estimated £1.3 billion cost of fraud against the charity sector is a sobering figure, we commend the NFA’s work in providing a more rigorous estimate. Charities rely on the trust and confidence of the giving public and for many fraud is a sensitive topic. However, fraud is serious crime which has huge costs to the sector and to society more widely.
We shouldn’t shy away from facing up to and tackling the issue and the key in doing so will be education – increasing knowledge and understanding of the problem. There needs to be a more open dialogue with regards to experiences and lessons learnt between charities, particularly those who have experienced fraud. Greater engagement and targeted discussion will be pivotal in bringing this £1.3 billion figure down.’
Bradshaw went on –
‘This figure should not undermine public confidence in the sector’s ability to manage funds and channel donations to beneficiaries. It is often the financial institutions who suffer the financial outcome rather than the charities. But as a sector we need to be proactive and show that we are taking all possible steps to help prevent this type of crime. Sadly, it would be naïve to believe that such a huge and wide ranging sector, with a combined income of over £52 billion per year, could be completely free from fraud -we can minimise exposure but it is unlikely that we can totally eradicate fraud.’
CFDG urges charities to use this figure as a prompt to review their own fraud policy and controls with a view to identifying potential improvements. While the majority of charities have systems in place to help prevent fraud, some still underestimate their risk of fraud and leave themselves vulnerable to abuse. In addition to the wide range of guidance available from Charity Commission, CFDG will continue to provide practical support to those charities who are worried about or who have been the victims of fraud.
NOTES TO EDITORS
1. CFDG is the charity that promotes best practice in charity finance management, supporting finance managers with conferences, training and a wealth of web-based information.
2. CFDG’s circa 1,700 members are responsible for the finances of charities with a wide variety of income levels. Between them our members manage some £21.75bn in charity income per year. For further information please contact Melora Jezierska at email@example.com or on 020 7250 8348.