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Friday, September 7th, 2018

Watch for the Threat from Inside

CashboxYou can trust people who are involved in charities and community groups, right, they are good hearted people?

The Charities Commission is quite clear that the answer needs to be ‘no’. It’s message is that Trustees are too trusting and too much cash given for charitable purposes is being fraudulently siphoned off into the pockets of those responsible for its charitable use.

There have been a staggering number of high profile cases in the news this year. In Geordieland alone:

  • the former Chief Executive of Age Concern South Tyneside was sent down in May for misappropriating in excess of £700,000;
  • in the same month, the former CEO of a local hospice was found guilty of misusing £100,000 to cover personal expenditure;
  • earlier, in March, three former senior personnel of an employment support charity had been convicted of fraud in excess of £450,000.

More locally, of course, last December, a Marston Green couple were jailed after trousering almost £900,000 of Birmingham Dogs Home’s money.

It is not just the greedy gaffers taking the big money, either. It is misguided to the think that a mousy elderly clerk in whose mouth butter would not melt does not have fingers in the petty cash tin or the cheery entrance steward at the Funday entrance gate is not taking his own percentage.

Sometimes, it is not cash which is ‘taken without permission’, but equipment, supplies or, increasingly, data.

The National Fraud Intelligence Bureau has just estimated that over 50% of organisations have suffered a threat from an insider and stated that ‘charities are as vulnerable to insider threats as the private or public sector’. And, in saying ‘charities’, the same applies to small clubs and associations as well.

There is clear cut advice that too much trust in people, too few internal controls and a lack of oversight in general lead to insiders feeling sufficiently comfortable to commit fraud.

Every Trustee or leader of a small group or association should familiarise themselves with good practice for fraud prevention and ensure that their organisation measures up. A good and robust starting point is the Charities Commission’s advice.