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Article:

Mitigating charity fraud – how to protect yourself while giving

21 October 2020

Charity work fills the gaps where public services are constrained; therefore they are reliant on donations and goodwill to keep operating. The current situation has seen a drop in donations and charities struggling. There are thousands of charities with smaller organisations appearing and disappearing frequently. Giving to charity has never been so important and those relying on charities for support has significantly increased.

However, Action Fraud figures show there has been a 400% increase in COVID-19 themed scams attempting to convince the public to part with their money. The threats are many and this statistic highlights the importance of protecting ourselves when donating to charity. Below are some factors to consider to ensure that when you donate to charity, all of the money arrives at the correct destination. 


Considerations and red flags to be wary of 

When donating to charity there are some questions worth pondering before parting with your money, which may highlight some red flags which indicate that things may not be exactly what they first appear.

Have you been asked to donate or are you initiating the donation? If you’ve been approached to donate consider your own public profile, both online and on social media - are your interests well publicised, have you made announcements about interests or wealth? How was the approach been made to you? 

How are you going to donate – one-off lump sum, regular personal payments, regular payments through proxy organisations or bequeathing through a will? Ensure you fully understand what you have agreed to and whether it feels right for the type of charity you are donating to. For example, if the charity ‘only’ allows payments over a certain amount or transferring via a third party, is there a sensible reason for this or does it not seem justifiable?

Some red flags to look out for that indicate things may not be above board include:

  • The charity name is very similar to a recognised charity
  • High-pressure techniques are being used to obtain your donation
  • The charity cause is linked to a recent event or to a political issue
  • The charity has not existed for long or has been “established” following an event
  • The payment method is not to a bank account or a bank account does not have a corporate name.


Five tips to help ensure your donation reaches the intended charity in full

  1. Do your own due diligence. Undertake an online search, something as simple as adding ‘scam’ or ‘fraud’ after the name of the charity can highlight whether the charity has attracted any negative attention.
     
  2. Undertake a Charity Commission search to gather more information about the charity, such as whether it is registered, trustee details, any income or expenditure and whether any action has been taken by the Charity Commission against the charity.
     
  3. Do not provide donations in cash, over the phone or by gift card. Scammers will encourage these methods of payment as they are harder to trace.
     
  4. Check whether the charity has counter fraud measures in place. Charities will have measures in place to ensure funds are appropriately allocated and spent. Some charities receive over half of their income from legacies alone and therefore have a stringent approach in managing and obtaining them.
     
  5. Monitor your payments. Once agreed on a donation, monitor your payments to the charity, checking the amount and frequency is what you agreed. Regularly check that you have not been signed up to recurring payments that were not previously authorised.


Remain vigilant to avoid the pitfalls

Public generosity coupled with fantastic charitable causes can positively impact many lives, creating a huge difference. Given the potential of fraudulent activity, people may have reservations which inhibit giving donations to charities. However, if you remain vigilant to the risks and consider where a fraudster may try to exploit a situation, you can often avoid the pitfalls and ensure your donation reaches the intended charity in full. 

If you’re considering donating to charity and want advice managing your money, or if you’ve recently donated and concerned you may have fallen foul to fraudulent activity, get in touch with Sophie Brown in our Counter Fraud team, or your usual BDO adviser.