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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

Third sector worrying more about fraud as costs rise


Survey reveals CEOs' concerns

Charities are increasingly concerned about the rising threat of fraud on their organisations as the cost-of-living crisis takes hold, according to a new survey,

Accountancy and business advisory firm BDO and the Fraud Advisory Panel took a survey of 120 leaders rom UK charities - published this week as part of Charity Fraud Awareness Week - and found that 43% of charities were the victims of fraud over the last 12 months.

This compares to 36% the previous year.

A third of those surveyed say they have experienced more instances of fraud or attempted fraud in the last year, with 64% of charities believing the risk will only increase in 2024 as the cost-of-living crisis takes hold and the financial strain on individuals and households increases.

Worryingly, the biggest threat comes from the charity’s own staff and volunteers. Of all frauds suffered by the charities questioned, 50% were conducted by people within the organisation.

On average, charities experienced three different types of fraud. The misappropriation of cash or assets by staff and volunteers was the most common (42%), followed by fraudulent staff expenses (35%).

However, payment diversion fraud, also known as push payment fraud, was also high this year, with 33% of charities experiencing this type of fraud. This fraud happens when a fraudster impersonates a supplier by creating or amending invoices to divert funds to bank accounts under their control.

Another significant change noted in the BDO/Fraud Advisory Panel research is the significant financial impact. For the most recent fraud, nine out 10 charities (92%) suffered a financial loss from fraudulent activity – up from 69% last year – representing a huge amount of valuable funds that have been diverted away from charitable purposes.

When looking at the total fraud losses over the last 12 months, the majority (65%) experienced losses under £100,000. However, 23% suffered financial blows up to £1m, and 4% suffered total losses exceeding £1m.

Tracey Kenworthy, counter fraud director at BDO, said: “In tough economic times, fraud risks are at their highest. It is unlikely to be a coincidence that we’re witnessing a growing trend for fraud as the UK endures a cost-of-living crisis. Sadly, in reality, these figures are likely to be just the tip of the iceberg, with so many frauds remaining undetected and unreported.

“While appreciating that so many charities are already stretched, it is important that charities do everything they can to tackle the fraud risks they are facing. The better charities understand their fraud risk and implement measures to prevent and detect it, the better chance they have in protecting against financial losses and severe reputational damage that can impact donor confidence.”

Sir David Green, Chair of Fraud Advisory Panel, added: “This year’s Charity Fraud Report underlines the need for charities of all sizes to cooperate in the fight against the threats posed by fraud.

“The 2023 survey clearly identifies those threats and underlines the need for collaboration across the private, public and third sectors so that the strength and effectiveness of our counter-fraud defences are maximised.”



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