Fraud in Small Charities: Evidence from England and Wales

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI linkPurpose – Despite the increasing awareness of fraud in organisations in the UK and the potential benefits of strong fraud management through deterrence and prevention, there remains limited research on fraud in small charities. This paper examines cases of fraud in small charities whilst raising awareness of the impact of fraud and its wider implications for the charity sector. Design/methodology/approach – This research used a qualitative approach amongst 24 randomly selected trustees of charities with annual incomes of £0 to £250,000 and over £250,000. Recent statistics are presented from fraud surveys published in the Annual Fraud Indicator by the National Fraud Authority and the United Kingdom Fraud Costs Measurement Committee (UKFCMC). The theory of why people commit fraud is also described. Findings – This paper summarises evidence that shows the frequency and severity of fraud in charities continues to increase. Furthermore, smaller charities are not immune from fraud and suffer losses due to lack of segregation of duties and weak control systems, when compared to larger charities with stronger control systems and better governance structure. This paper addresses a very important topic in the charity sector. Whilst fraud and fund misappropriation in large charities receive significant media coverage, smaller charities also suffer losses occasioned by fraud – even in larger proportions – but with less reporting in the media. Practical implications – Charity managers and trustees will benefit from having sufficient knowledge of deterrence and prevention of charity fraud. Originality/value – This is a novel research project as it looks into the nature of fraud in small charities, about which there is limited research in the literature both on fraud and the voluntary sector