Charity Fraud: Trends and Prevention Strategies

What trends are emerging in charity fraud?

Survey results from 139 UK charities show that fraud was as prevalent in 2024 as in 2023, affecting over one in four organisations. 

The most common types of fraud in 2024 were broadly consistent with the previous year: 

• Misappropriation or theft of assets, including cash (40%), 
• Payment diversions (33%), and
• False expense claims (29%).

One potential factor is the ongoing cost-of-living crisis, with 60% of respondents believing this has increased fraud risks by pushing financially pressured individuals towards fraudulent activity.  

The financial impact of fraud on charity funds remains substantial. In 2024, 84% reported suffering financial losses, down from 92% in the previous year, yet individual cases still saw losses ranging from £102,000 to £197,000.

However, charities are increasingly attuned to the non-financial consequences of fraud, felt by 78% of affected charities compared to 56% in the year prior. This includes reputational damage, decreased morale and a loss of trust. These effects can be long-lasting and profound, especially in a sector that relies heavily on public trust and on the confidence placed in its employees and volunteers. 

Looking ahead, 56% of respondents consider phishing to be a primary concern in 2025, likely driven by media attention on cyberattacks. However, the most common types of frauds, listed above, are expected to remain prevalent. 

Who are the perpetrators? 

Fraud in charities may arise in various forms, from the mismanagement of funds to embezzlement and cybercrime, and may originate from several sources.  

Troublingly, the survey identified that there is a sustained risk of fraud originating inside the charity: 50% of all frauds committed are perpetrated by staff, volunteers and trustees, consistent with findings from the previous two years. By contrast, 29% of frauds were committed by people with no connection to the charity, up 6% from the previous year.

About half of charities anticipate fraud risk will increase during 2025. This is 21% more optimistic than in the past, however it highlights a need for trustees to avoid complacency and ensure that optimism is backed up by adequate anti-fraud measures. 

How can your charity navigate the risk of fraud?

There are several steps that charity leaders can take to reduce the risk of fraud within their organisation. These include: 

• Strengthen controls: Financial controls such as authorising payments, approving expenses and having a regular external audit are essential to safeguarding funds. 
• Increase fraud awareness: Providing training for all staff, volunteers, and trustees is crucial for identifying fraud and following proper reporting procedures. 
• Leverage technology: Secure online portals, fraud detection software, and encryption to protect sensitive data from cybercriminals are some of the ways to deflect potential threats. 
• Establish policies and response plans: Responsibilities must be clearly defined when it comes to fraud risk, including a clear action plan for handling suspicious activity. 
• Promote a culture of transparency: Charity leaders must actively foster a safe, fraud-aware culture where staff are encouraged to speak up about concerns.

Survey information from Charity Fraud Report 2024

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If you’re concerned about fraud, our specialist Charity and Not-For-Profit Team is here to help. We offer professional advice tailored to your organisation’s needs. Please complete the form below and we will be in touch to discuss how we can support you.