Fraud costs large charity sector £1.65bn a year, report says

Fraud in the large charity sector costs £1.65bn a year, according to a report published today by accountants BDO and the Centre for Counter Fraud Studies in Portsmouth.

The report, entitled Minimising Fraud and Maximising Results for Charitable Purposes, uses a global database collected by the centre, which shows that fraud accounts for 5.47 per cent of turnover, and applies this figure to the total income of 842 charities with incomes over £10m.

Jim Gee, director of counter fraud services at BDO and one of the report’s authors, said that using the university’s global database produced a more accurate figure than relying on figures which showed reported fraud.

“Only around a thirtieth of fraud is detected,” he said. “Detected fraud is not an accurate estimate of the total cost.”

Gee said the figure was likely to be an underestimate for the whole sector, because it only referred to large charities, and because it did not take into account charities’ ability to prevent fraud, which may be lower than other sectors.

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