If fraud has been committed then the charity is likely to refer it to the police for criminal prosecution. However, the charity may also consider civil action in order to attempt to recover the assets which have been taken from the charity and/or damages against the fraudster. As with any litigation, this can be costly in terms of time and legal fees and prevention through active governance reviews will undoubtedly be preferable if your charity is unlucky enough to be a victim, even if it may seem onerous at the time.
There is no all-encompassing civil claim of fraud. Instead, the charity will most likely plead a number of civil causes of action which may be bought together, some of which avoid having to prove a fraudulent mindset, which can be evidentially difficult, for example:
Even if the charity's civil claims against a fraudster have good prospects of success, the trustees will need to consider their duties. In particular, the duties to act in the best interests of the charity and to manage the charity's resources responsibly. The costs of pursing any civil claim is likely to be substantial, and if it proceeds all the way to a trial, the costs bill could be a six figure sum. From the outset, the trustees will need to consider where the dissipated assets have gone and how likely it is that a damages claim would lead to a recovery. The trustees may also need to seek the Charity Commission's consent, or a Court Order, before proceeding with the claim to approve the costs being incurred. That should help limit trustees personal exposure should eg a beneficiary claim that the costs should not have been incurred. Further, trustees should always be weary that litigation carries risk, and should the civil claims be unsuccessful, the charity could be liable for the defendant's costs in addition to its own.
It may well be that some costs protection is available, for example, the charity may be able to obtain after-the-event (ATE) insurance which can provide cover for the costs in pursuing litigation, but the premiums charged to the charity will be significant. It may also be possible to protect against the charity's own costs by obtaining funding through a commercial third party litigation funding provider.
In short, rather than considering civil options to deal with fraud after the event, without a doubt as noted above, the best strategy for all charities is to take robust and proactive steps to strengthen internal governance and finance procedures to seek to prevent fraud in the first place.