Charities plagued by high amount of fraud activity

Fraud costs Porirua’s charities $ 1 million a year, so every paperclip and envelope must be accounted for, charity workers were told at a recent workshop.

Staff from 30 charities around the Wellington region gathered at Pataka on June 27 to hear results of a transTasman survey on charity fraud, presented by fraud experts.

Porirua’s 178 registered charities are worth $55.8m a year. About 1.7 per cent of that is lost to fraud, BDO audit partner Mark Bewley told the crowd. In the Wellington region $40m is stolen a year.

‘‘That’s quite a big chunk of money, and at a time when everybody’s tightening their belts there’s huge financial impact,’’ Mr Bewley said.

About 60 per cent of charities are affected by fraud, he said. Online fraud, involving internet banking, makes up just 4 per cent of fraud cases but costs the sector the most – the average amount stolen is $370,000, Mr Bewley said.

‘‘It’s scary how fast that can become a very big number.’’

Payroll and credit cards are other common vehicles for fraud, he said.

The average fraudster is a woman employee in her 40s, who feels she is not earning enough and tries to keep up with the Joneses, Mr Bewley said.

However, anybody who hits a rough patch in their personal lives could be tempted to rip off a charity, he said.

Not only does fraud leave a big hole in a charity’s finances, the resulting image damage makes it harder for the charity to attract funding and donations, he said.

‘‘Not only do you have a hole you have got to fill but you’re often on the back foot.’’

An unapologetically strict office culture is essential to preventing fraud, Charities senior investigator Simon Humphries told workshop attendees.

Staff taking an envelope or printing personal documents at work should be regarded as thieves, he said.

‘‘It’s stealing off people who give you money.’’