Charities expect fraud threat to increase this year, survey finds
Charities expect fraud threat to increase this year, survey finds
- Over a third (34%) of charities reported incidents of fraud or attempted fraud in the last year
- 38% of perpetrators were insiders within the charity
- Almost three quarters (73%) of charities surveyed suffered a financial loss due to fraud in the past year, but only 32% recovered losses
- 45% said an over-reliance on trust was still a barrier to fraud prevention, but 57% of fraud incidents were detected using internal controls.
Despite improvements in fraud awareness and fraud prevention among charities over the last five years, over half (52%) expect the threat of fraud to increase in 2026, according to a new report from accountancy and business advisory firm BDO and the Fraud Advisory Panel.
The Charity Fraud Report, which surveyed over 160 leaders from UK charities, found that over a third (34%) have reported incidents of fraud or attempted fraud in the last 12 months (down from 42% last year), with 38% of the perpetrators being individuals from within the charity.
Whilst the level of insider fraud has fallen since the survey began five years ago, the consequence of reputational damage has doubled in the last year. In addition, almost three quarters (73%) of charities suffered a financial loss due to fraud in the past year, with only 32% of them recovering losses. This suggests that whilst fewer incidents of fraud are taking place, their impact is far greater and the risk to the erosion of the public's trust should remain at the forefront of fraud prevention measures.
Looking ahead to the next 12 months, cyber-attacks were cited as the biggest concern, particularly in light of high-profile cases such as Jaguar Land Rover, M&S, Harrods and the Co-op, which resulted in significant operational disruptions and data security concerns.
As a result, 42% of charities have already taken some cyber-related actions, with a further 11% planning to take additional measures.
However, only a third (34%) said they had increased their financial investment in fraud prevention. This suggests a risk that fraud losses could exceed any reasonable budget allocated for prevention.
Fiona Condron, National Head of Charities at BDO, said:
“The Charity Commission's Sector Risk Assessment 2025 highlights fraud as a key sector risk and the Commission's casework indicates that external frauds target those charities with high incomes and are opportunistic in nature. The Charity Fraud Report aligns with this view and emphasises the need for continued vigilance.
Tracey Kenworthy, Forensic Accounting Director at BDO, said:
“Fraudsters are always adapting and finding new ways to target charities, but the sector’s awareness of the risks has improved considerably. While factors like changes in charity operations or new processes can influence fraud trends, it is essential for charities to remain alert and adjust to the evolving risk landscape.
“Charities must keep pace with emerging fraud trends to stay ahead of the increased threat to their assets and resources by effectively mitigating risks. The fact that nearly half (45%) of leaders see an over-reliance of trust as a barrier to fraud prevention tells us that there is more to be done in protecting the future of the sector.
Sir David Green, Chair of the Fraud Advisor Panel, adds:
“The fifth Charity Fraud Report shows that the number of reported frauds has fallen and so too has the number committed by those working for the charities themselves. This demonstrates what can be achieved when sectors work together to raise awareness of the fraud threat. With the highest number of responses to the survey showing just how far the conversation has progressed, charities must ensure they maintain this momentum by working together to recognise and tackle fraud.”
Matthew Field, Head of the Fraud Advisory Panel, said:
“Marking the tenth anniversary of Charity Fraud Awareness Week and fifth year of the BDO Charity Fraud Survey with the highest number of respondents is a significant and incredibly positive milestone for the sector. Charities are becoming increasingly aware of the fraud threat and how to respond to it, with the Charity Fraud Report sitting as a driver behind this encouraging proactive stance. The commitment and dedication from BDO and colleagues from across the public and private sectors have made this progress possible and we thank all for their contributions and support.”
The Economic Crime & Corporate Transparency Act (ECCTA) failure to prevent fraud legislation came into force in September 2025. Of the charities caught by the legislation, 79% had already acted in preparation for it. This suggests that charities are taking the legislation seriously, implementing readiness assessments and effective controls to mitigate risk of prosecution.
Almost half (48%) of charities understood that their organisation was caught by ECCTA (compared to 45% last year), meaning they met two of the three criteria applicable to the failure to prevent fraud offence:
- More than 250 employees
- More than £36 million turnover
- More than £18 million in assets.
Organisations should continue to take steps to proactively review their fraud prevention framework and benchmark against the six key pillars for reasonable fraud prevention procedures in line with Home Office guidance.
You can read the full report here: Charity Fraud Report – A Five Year Review.
ENDS
Note to editors
BDO UK operates in 17 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to the entrepreneurial, ambitious and growing mid-sized businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.
BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 169 countries and territories, with 95,000 people working out of 870 offices worldwide. It has revenues of US$11bn.
Contact
Nikki Barnsley-Walker
Corporate Affairs Assistant Manager, BDO
Email: Nikki.barnsley-walker@bdo.co.uk
Press office
Email: media@bdo.co.uk