Most people who fundraise for charity do so because they believe in the causes they collect for. However, a small number of fundraisers are not so well intentioned, or they start out with good intentions but find the allure of cash hard to resist.
Fundraising frauds strike at the heart of the charity sector – diverting funds from the purpose for which they were donated, damaging the reputation and morale of the organisation and other fundraisers in the sector, and eroding public trust.
Simply stated, ‘fundraising fraud’ is when a person raises money for a cause but does not pass all of the money raised to the charity.
Not all fraudulent fundraisers set out with bad intentions. Sometimes there are genuine reasons why funds have not been passed on, so a tactful but robust approach is vital.
Volunteer fundraising frauds can be categorised into:
Specific risks can also be posed by third- party fundraisers or local fundraising committees, but these are not considered in this helpsheet.
(Unknown to the charity) A person not known to the charity pretends to collect on its behalf. The fraudster steals or purchases a collection tin and uses a logo from the internet in order to give the impression of being a genuine collector. Using these false credentials, the bogus fundraiser undertakes cash collections in public or private areas such as in the street, or in pubs and stores.
(Known to the charity) A supporter contacts the charity to obtain materials (eg, T-shirts, wristbands, pins) or other credentials in order to pose as a fundraiser with the intention of keeping the money or passing on only a small amount. In this instance the fraudster exploits the charity’s keenness to engage with volunteer fundraisers and relies on the fact that there will be little or no follow up on the monies collected.
A company might use a charity’s branding in order to imply association without the knowledge or consent of the charity concerned. For example, a burger bar states on their menu that ‘10% of the value of orders placed in December will be donated to [a named charity]’, but no money is received by the charity. This is even worse if the charity concerned doesn’t want their branding associated with the company.
Organised fundraising fraud: A company contacts a charity and offers to undertake fundraising activities at a number of locations using several volunteers. Collections are then made but only a small proportion of the money raised is received.
A person raises money for the charity with the intention of donating it, but they succumb to temptation and keep the cash they have raised.
Sometimes a supporter may raise money for Charity A but donate it to Charity B or directly to a beneficiary or another individual. Consideration of dishonesty and intent are important in these instances as this is the difference between fraud and error.
Every charity should make it easy for fundraisers to do the right thing.
Effective compliance and anti-fraud processes can help to prevent spontaneous fraud and detect premeditated fraud.
Before fundraising activity takes place:
Your fundraising team will also need to know when to contact supporters both before and after the event and the methods of contact to use. Follow up donations post event so that discrepancies can be accounted for or referred for further investigation.
Certain kinds of behaviour can be red flags for fundraising fraud.
None of these are clear-cut evidence of fraud, but they might point to the need for further investigation.
If you suspect fundraising fraud act promptly.
BUILDING YOUR CHARITY’S DEFENCES.
Preventing Charity Fraud contains resources to help charities prevent, detect and respond to fraud.
This helpsheet was kindly prepared by Cancer Research UK.
Published 2019. Last updated August 2021.
© Fraud Advisory Panel, Charity Commission for England and Wales and Cancer Research UK 2019, 2021. Fraud Advisory Panel, Charity Commission for England and Wales and Cancer Research UK will not be liable for any reliance you place on
the information in this material. You should seek independent advice.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.