Charity Fraud Awareness Week 2026 - Managing your fraud risks

Fraud in the charity sector

Fraud remains a significant issue for the charity sector.

Research published last year by BDO and the Fraud Advisory Panel found that as many as 34% of charities reported that they suffered from fraud or attempted fraud. However, this figure reflects only reported incidents, so the true proportion is likely to be higher (particularly as fraud is not always recognised for what it is or fully understood, and victims may sometimes feel embarrassed or reluctant to report what has happened).

Of the charities included in the BDO and the Fraud Advisory Panel research, 73% suffered financial loss and the average loss was between £11,000 and £110,000.

Charities are often viewed as easier targets and can be particularly vulnerable to attempted fraud. Fraud threats can come from outside a charity, such as from third parties seeking to deceive it, or from within, including fraud committed by rogue members of staff. Please see our articles prepared for Charity Fraud Awareness Week 2025 which explains the challenges that the sector faces further.

We also cannot help but think back to the Cifas statistic from earlier in the year which may also be of particular concern to charities - 50% of UK adults now consider that committing first party fraud is 'reasonable' (first party fraud being where a person uses their own genuine identity to deceive another person or organisation - e.g. falsely claiming that a package did not arrive or falsifying information on a mortgage application). The 50% statistic is an increase on the previous year's statistic (which was 48%) and appears to reflect that fraudulent behaviour is often misunderstood or, more worryingly, is becoming normalised and 'acceptable' behaviour over time. Those behaviours can create a real risk for charities, the safety of their funds and the pursuit of their objectives

Charity Fraud Awareness Week 2026

That is why awareness weeks such as these are so important. Raising awareness can help charities identify fraud risks, strengthen their safeguards and respond effectively when concerns arise.

The campaign this year focuses on the following key messages:

• Awareness is powerful.

• Fraud prevention starts with a conversation.

• Know your risks. Protect your funds.

• When was the last time you reviewed your fraud risks.

We could not agree more.

Awareness is powerful

Effective fraud prevention starts with ensuring that trustees, employees and volunteers understand what fraud looks like, how it can arise and why it matters. Regular, practical training can help people recognise warning signs, challenge potentially dishonest behaviour and report concerns promptly.

This is particularly important given the recent Cifas statistic that 1 in 2 UK adults consider some forms of first party fraud to be acceptable. If such conduct becomes normalised or is dismissed as harmless, charities face a greater risk that those working for or dealing with them may fail to recognise fraudulent behaviour or may seek to justify it.

Training should therefore address not only a charity's procedures but also the behaviours and rationalisations that can allow fraud to occur.

Fraud prevention starts with a conversation

Training is most effective when supported by an open anti-fraud culture. Trustees and senior leaders should make clear that fraud prevention is everyone's responsibility and that concerns will be taken seriously.

An effective whistleblowing policy also forms an important part of that culture. Staff and volunteers should know how to raise a concern, including outside their usual reporting line, and feel confident that they can do so without fear of retaliation. Charities should also ensure that concerns are assessed promptly and objectively, with appropriate escalation and investigation procedures in place.

Encouraging people to speak up can enable a charity to identify suspected wrongdoing at an early stage, reducing the potential for financial and reputational harm.

Know your risks and protect your funds

Charities should regularly assess where and how fraud could occur, review the controls already in place and address any gaps. The assessment should reflect the charity's particular activities and risks, including its payment processes, fundraising arrangements, grant-making, procurement, use of volunteers and third-party relationships.

This is especially important for larger incorporated charities that may fall within the failure to prevent fraud offence under section 199 of the Economic Crime and Corporate Transparency Act 2023. An organisation within scope may commit an offence if an associated person commits fraud intending to benefit the organisation or those to whom it provides services, unless the organisation can show that it had reasonable fraud prevention procedures in place - or that it was reasonable not to have such procedures.

Smaller charities may fall outside the statutory offence, but that does not make reviewing fraud risk any less important. They may have fewer resources, less segregation of duties and a greater reliance on trust, meaning that a single incident can have a particularly serious impact.

Charities of all sizes should also be alert to the possibility that fraudulent conduct committed by senior staff could be attributed to the charity too pursuant to s250 of the Crime and Policing Act 2026 (which came into force in June earlier this year).

There is no one-size-fits-all solution. Each charity should adopt a proportionate, risk-based approach that reflects its size, structure, activities and resources. The key question is not whether every possible risk can be eliminated, but whether the charity understands its principal risks and has sensible, workable safeguards in place.

If you would like help reviewing your fraud risk assessment, whistleblowing policy or staff training, please contact Ben Hay, Legal Director in our Fraud team.