£8m of charitable funds lost to fraud – here’s how to beat the con artists
As scams and defrauding schemes become more sophisticated, annual charity losses to fraud have skyrocketed. In 2018/2019, annual losses reported to Action Fraud (the UK centre for reporting fraud and cyber-crime) total nearly £8m.
That’s £8m of donations stolen directly from the pockets of not-for-profits. It’s an enormous amount of financial loss, but when you consider that this number only accounts for the losses actually reported to Action Fraud, the actual figure stands to be much higher. Unfortunately, charities are losing money to fraudsters hand over fist.
How is this happening?
Procurement fraud and phishing emails account for a large proportion of charity losses. In fact, they are the most commonly reported method of fraud used against charities.
Otherwise known as mandate fraud, this usually involves fraudsters sending out targeted emails asking for payment for services.
These emails might look like a regular transaction from a trusted supplier but will ask organisations to change the target bank account, siphoning off funds that have been allocated to a legitimate purpose.
These fraudsters may adopt the persona of real staff members and even spoof their email address and credentials, so it might seem like there’s no way to identify them. It’s easy to see how staff members could make a small mistake in the moment that could have large financial implications for your organisation.
How to combat mandate fraud
Thankfully, organisations are tightening the net against these fraudsters and fighting back. With stringent approval procedures for purchasing and procurement, this fraud can be stopped dead in its tracks, saving not-for-profit organisations thousands of pounds
The solution is simple, but without the right tools, it can be tricky or even impossible to implement. However, nowadays, charities can’t afford not to take measures against fraud. Last year alone, the average losses to fraud were found to be £7,428 per organisation – money that could have been put towards furthering worthy causes.
Anti-fraud measures for your organisation
It might seem like a buzzword, but automation can help charities save time and money on a number of day-to-day tasks – not least fraud prevention. In fact, powerful automation tools can enable charities to put robust workflows in place that would otherwise be impossible.
With IRIS Financials’ leading purchasing and procurement software, you can set up automated workflows that filter invoices and purchase orders through to the appropriate staff members for approval depending on a range of factors, such as overall value. This makes it impossible for rogue purchases to slip through the net and stops fraudsters in their tracks.
What’s more, our robust not for profit accounting software is built around unified ledger technology, you only have to manage a single ledger and can drill down into your financial data to find out exactly how your funds are being used. There are no ambiguous GL codes to figure out, so everything’s easy to understand.
With upcoming support for automated invoice matching, your anti-fraud measures can be fully automated by the IRIS Financials software suite. If you’d like to combat financial fraud, check out IRIS Financials to find out more.