This strategy document describes the Charity Commission's role and approach in dealing with fraud, financial crime and financial abuse issues connected with charities. It explains:

• how we deal with concerns of financial crime and financial mismanagement in charities
• when we might intervene, why and how
• how we work with the sector and other agencies aiming to prevent problems arising in the first place

You can also view a colour PDF version of our Summary strategy for dealing with fraud, financial crime and financial abuse of the charity sector

The role of trustees

The public expects that money donated to charity is used properly and goes to the causes for which it is intended. It is the trustees of charities who are legally responsible for ensuring that the charity’s funds are properly used. Trustees must do all they reasonably can to prevent charitable assets from being misused and abused for fraudulent or other criminal purposes. Strong financial controls, and good governance and management, are key to minimising any risks posed to charity assets. They are increasingly important factors in determining people’s trust and confidence in charities.

The different types of financial abuse in charities

Financial abuse in charities ranges across a wide spectrum. Misuse of charity funds may occur because of a lack of oversight and control by trustees. More serious cases may involve the misuse and loss of funds resulting from mismanagement or negligent conduct. Some of the most serious cases, and ones that run the risk of significantly damaging the charity and its reputation, involve serious misconduct, misuse or deliberate abuse of funds for improper, criminal and fraudulent purposes. This may involve wilful negligence and recklessness, or serious and organised crime, such as money laundering.

What is the Commission’s strategy for dealing with fraud and financial crime and abuse in charities?

Our strategic aim is to help charities to protect themselves better by alerting them to the risks of fraud, financial crime and financial abuse, and providing online guidance to assist them to manage these risks and prevent abuse. We prioritise the most serious cases of regulatory concern where the risk to the charity or to the sector is high, the abuse is deliberate and the trustees are unable or unwilling to put things right. It is for the police, not the Charity Commission, to investigate and prosecute fraud or other criminal matters arising in charities. However, we will notify the police of concerns and work with them where necessary. Our regulatory interest in such cases is in preventing, disrupting and investigating serious financial abuse which breaches charity law. Criminal investigations look back to the crime incident. Our role as regulator is also to look forward to ensure the charity is protected and placed on a secure footing for the future.

Our strategy has a four-strand approach which emphasises prevention. It clarifies when we will become involved and the purpose and scope of our engagement. The four strands of our strategic approach are:

Awareness and Prevention: To prevent problems arising in the first place, we provide online guidance for trustees to raise awareness of risks and vulnerabilities and practical advice on how to manage these risks. We provide alerts and warnings to the sector to raise awareness of specific risks, such as scams, as they come to our attention. We publish the wider lessons from our investigatory work for the benefit of other charities, and signpost charities to other sources of specialist information.

 

Oversight and Supervision: We monitor trustees’ reports of serious incidents of fraud and significant financial loss within their charity, and referrals made by other agencies of serious financial crime and abuse in charities. We ensure compliance by charities with the Commission’s regulatory advice and directions.

 

Co-operation: We continue to strengthen our liaison with law enforcement and other government agencies to detect, deter and disrupt financial crime and abuse in charities.

 

Intervention: We undertake investigations in the most serious cases in order to protect the charity's funds and assets and ensure public trust and confidence in the charity and the sector generally, using our regulatory powers where necessary and proportionate to do so.

 

Charity Fraud: National Counter Fraud Landscape – Working Together

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