Additionally, a staggering 92% of charities have experienced financial loss due to fraud, found the latest BDO Charity Fraud Report.

The most common fraud was the misappropriation of cash or assets with 42% of charities suffering from theft this year, followed by expense and subsistence fraud at 35%.

Detecting fraud was one of the most challenging aspects of the fraud risk management framework.

Internal controls (67%) remained the most common means for detecting fraud, up by almost 20% from last year. This suggested that charities were giving internal controls the attention they deserve as the charity’s first line of defence.

Of those charities which suffered a fraud or an attempted fraud, the majority experienced between one and five frauds. However, 17% suffered more than 10, which was a marked increase on 2022 where only 9% experienced more than 10 frauds.

Charities that experienced losses of £10,000 or more this year doubled according to 43% of charities. Respondents who lost between £100,000 and £1m accounted for 12% of these with 2% reporting over £1m lost due to fraud.

The findings have been highlighted in Charity Fraud Awareness Week, now in its 8th year, flagging the prevalence of fraud across the charity sector.

Two thirds of charities surveyed said they believed the cost of living crisis was having an impact on the number of fraudulent activities.

Tracey Kenworthy, counter fraud director at BDO said: ‘In tough economic times, fraud risks are at their highest. It is unlikely to be a coincidence that we’re witnessing a growing trend for fraud as the UK endures a cost of living crisis.

‘Sadly, in reality, these figures are likely to be just the tip of the iceberg, with so many frauds remaining undetected and unreported.

‘While appreciating that so many charities are already stretched, it is important that charities do everything they can to tackle the fraud risks they are facing.

‘The better charities understand their fraud risk and implement measures to prevent and detect it, the better chance they have in protecting against financial losses and severe reputational damage that can impact donor confidence.’

Fraud is prevalent throughout the UK, and not just in charitable organisations, 40% of all crimes committed are due to fraud.

Rui Domingues, director of finance and operations at Charity Finance Group said: ‘The 2023 Charity Fraud Report shows that we are now looking at the issue of fraud through new and increasingly complex lenses.

‘Most charity leaders recognise that the economic downturn and the cost of living crisis can be catalysts for increased fraudulent activity, from both inside and outside their charity.

‘However, the increasing financial pressures that charities are under can sometimes make taking action a lower priority.

‘Staff, trustees and volunteers are the eyes and ears of your organisation and are on the frontline of fraud prevention. It’s vital that they are able to recognise different types of fraud and understand its potential impact.’

The BDO report was based on a survey of 121 UK-based charities.

BDO Prevent Charity Fraud report