Cost of fraud for UK charities reaches £2bn a year
Melanie May | 6 June 2016 | News
Fraud costs the charity sector £2bn a year, according to statistics from The Annual Fraud Indicator 2016.
Produced by the UK Fraud Costs Measurement Committee (UKFCMC), and supported by Experian and PKF Littlejohn, the report is based on research by University of Portsmouth’s Centre for Counter Fraud Studies. It found that the overall annual cost of fraud in the UK could be as high as £193bn per year.
It found that fraud in the third sector cost around £1.9bn a year in 2013-14, and notes that this includes all registered charities and not just voluntary and aid organisations.
The biggest source of fraud for third sector organisations relates to procurement, accounting for an estimated annual £776m of losses in the sector.
In addition to procurement fraud, the biggest types of fraud impacting UK charities in 2013-14 identified by the Annual Fraud Indicator are:
- Payroll fraud, which accounted for losses of £886m
- Grant fraud, which accounted for £196m of losses
- Between 2006-13, mass marketing fraud, accounted for 3,563m.
Jim Gee, chair of the UK Fraud Cost Measurement Committee and head of Forensic Counter Fraud Services at PKF Littlejohn, said:
“Fraud has a pernicious social and economic impact on the UK. Private sector companies are less financially stable and healthy than they would otherwise be; public sector organisations cannot provide the quality of public services that we pay our taxes to get; and charities are deprived of the full value of the donations we make. The best way to reduce its extent and cost is to make sure our organisations are fraud resilient and able to protect themselves against a continually evolving threat.”
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.