Nonprofit Fraud Prevention: UK 1; USA 0

by Gary Snyder

In the United Kingdom, one in 10 charities have experienced fraud in the past year. 

The UK cares about it is doing something about it. They have an Annual Fraud Indicator, released by the National Fraud Authority. The USA doesn't believe that there is a problem with fraud despite studies that have suggested that charity fraud is exploding and amounts to $41-51 billion.

The UK has come up with suggestions to mitigate the problem by addressing alternatives to support the charity's employees, trustees, volunteers and donors. On a national level, the USA has not even considered a comprehensive approach to resolving the current charity fraud scourge.

Here are some suggested guidelines, from across the pond, that charities can do if they suspect that they are victims of fraud or fraudulent activity.

Steps you can take to prevent fraud

• Read the Charity Commission guidelines on fraud, which outline ways for charities to tighten up on security and protect their organization

• Check that your charity has adequate financial controls in place governing the access, use and storage of electronic information

• Have systems in place for employees and volunteers to report any suspicions of fraud

• Review your risk assessment procedures relating to the charity's structure, activities and area of operation

What to do when you suspect fraud

• Quickly report it to the Charity Commission and seek legal advice right away

• Where necessary it should also be reported to the police. This can be done via Action Fraud

• If you suspect that an executor is acting fraudulently, an application can be made through the civil courts to replace him or her

• Conduct a review and update its internal risk assessment and financial control policies to prevent this happening again.

Reputation is vital to a charity and can be easily tarnished. It should take a hard prevention line.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)