Fraud in small charities: evidence from England and Wales
| Pages | 211-222 |
| Published date | 07 January 2019 |
| Date | 07 January 2019 |
| DOI | https://doi.org/10.1108/JFC-12-2017-0122 |
| Author | Paschal Ohalehi |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Fraud in small charities: evidence
from England and Wales
Paschal Ohalehi
De Montfort University, Leicester, UK
Abstract
Purpose –Despite the increasing awarenessof fraud in organisations and the potential benefits of strong
fraud management throughdeterrence and prevention in the UK, there remains limitedresearch on fraud in
small charities. This paper aims to examine astonishing cases of fraud in small charities whilst raising
awarenessof the impact of fraud and its wider implication in the charitysector.
Design/methodology/approach –This research used a qualitative approach amongst randomly
selected 24 charitytrustees with income of £0-250,000 and over £250,000.Recent statistics from fraud survey
published in Annual FraudIndicator by the National Fraud Authority and the UnitedKingdom Fraud Costs
MeasurementCommittee were presented and the theory of why peoplecommit fraud is described.
Findings –This paper summarises evidence that showsthe frequency and severity of fraud in charities,
which remains increasinglyhigh. Furthermore, smaller charities arenot immune from fraud and suffer losses
due to lack of segregation of duties and weak control systems when compared to larger charities with
stronger controlsystems and better governance structure.This paper addresses a very important topic inthe
charity sector. Whilst fraud and fund misappropriation receive significant mediacoverage in large charities,
smaller charities also sufferlosses occasioned by fraud even in large proportion albeit withless reporting in
the media.
Practical implications –Charity managersand trustees will benefit from having sufficient knowledge in
deterrenceand prevention of charity fraud.
Originality/value –This is a novel research as it looks into thenature of fraud in small charities of which
there is limitedresearch both in the voluntary and fraud literature.
Keywords Fraud triangle, Fraud, Charity fraud, Small charities
Paper type Research paper
1. Introduction
Charities in the UK have played active roles since their inception in supporting disadvantaged
membersofsociety,bothintheUKandoverseas(
Dhanani and Connolly, 2012;Bennett and
Savani, 2011;Keating and Frumkin, 2003;Gray et al., 2006). People’sgenerosityisseeninthe
amount of charitable giving in the UK by individuals, organisations and government, including
the number of people volunteering each month in support of various charities (National Council
Voluntary Organisations, 2015). However, despite the growing importance of charitable
activities, coupled with their exponential growth (Dhanani and Connolly, 2012) in recent
decades, there has been limited research on fraud in smaller charities. Hence, the focus of this
paper is on fraud in small charities and its implications for the wider charity sector.
According to Kramer(2015):
[...] fraud is a dark side of business, one that many people prefer not to think about much, if at
all. However, ignorance is not bliss when it comes to fraud in small businesses because they
usually do not have sufficient resources to survive a fraud loss.
Whenever fraud occurs in organisations, there are no clear winners. Although the fraud
committers may enjoy temporaryhigh lifestyles or temporarily keep the organisations from
Fraud in small
charities
211
Journalof Financial Crime
Vol.26 No. 1, 2019
pp. 211-222
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-12-2017-0122
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