Fraud in the charity sector is a growing concern. Charities rely on public trust and donations to fund their programs but the very nature of these organisations can make them vulnerable to financial misconduct. We all want to make sure that our hard work ends up benefiting those in need.
GoodHub implements a three step process. Firstly, we verify that the person registering the charity is real via a series of checks. Secondly, we verify that the organisation is real and registered with a regulatory body such as The Charity Commission or Company House. Finally we verify that the bank account belongs to the organisation. We are also registered with The Fundraising Regulator and adhere to their code of conduct. Whilst fraudsters are clever, and there is always some risk, we’re proud to say that our three step process means that we have helped to raise millions for good causes and not had a single instance of fraud.
There are other ways that you can protect your organisation:
1. Implement Strong Financial Controls
Charities should have robust financial policies in place, including clear budgeting processes, regular audits, and proper documentation for all transactions. By keeping accurate financial records and regularly reviewing them, you can spot irregularities early. Using accounting software with built-in security features can also reduce the risk of errors and fraud.
2. Conduct Thorough Background Checks
Staff and volunteers should be vetted before they are given access to sensitive financial information or responsibilities.
3. Promote Transparency
Donors and stakeholders should be able to access information about how their contributions are being spent. Publishing financial reports, including income and expenditure breakdowns, fosters trust and accountability. Transparency also discourages fraudulent behaviour, as it increases the likelihood of detection.
4. Educate Employees and Volunteers About Fraud Prevention
Training staff and volunteers on fraud, ethical practices, and following internal policies can help to reduce the likelihood of fraudulent activity. Encourage a culture of openness where staff feel comfortable reporting any suspicious behaviour without fear of retaliation.
5. Monitor and Evaluate Programs
Charities should regularly assess the effectiveness of their programs and services to ensure they are delivering as promised. Fraud can occur when funds are misallocated or misused, so continuous oversight is essential. Random audits and program evaluations can help identify any discrepancies or misuse of funds.
6. Donors Should Research Before Giving
For individual donors, due diligence is key. Always research the charity you plan to support. Look for organizations that are registered with relevant authorities. Avoid giving to charities that don’t provide clear information about their programs and financial activities.
7. Beware of “Too Good to Be True” Requests
Fraudulent actors may pose as legitimate charities, particularly during times of crisis or disaster. Be cautious of unsolicited donation requests, especially those that pressure you to act quickly.
Conclusion
While the charity sector is largely trustworthy, the risk of fraud remains a concern. With the parameters above, fraud can be minimised. Together, we can make sure that our time and money gets to where it is needed.