May 21, 2021 | International Payments

What NGOs need to know to prevent fraudulent activities?

Fraudsters are coming up with more and more creative ways to scam.

As recently reported in the media, UK Police and Action Fraud have registered scams totalling £34.5 million since 1 March 20201. The UK is receiving over 20% of the global malicious spam emails with 'coronavirus' in the subject field. Fraudsters are undaunted and unphased by the human suffering of the pandemic. Their interest is purely financial. Malicious emails can include hot topics such as vaccine and personal protective equipment.

Ignoring fraud won’t make mitigate the risk, it only takes a single case of fraud to cause severe damage and these attacks can take multiple forms, for example invoice diversion, money laundering, corruption, unauthorized fundraising, cyber-attacks, and the list goes on…

The consequences could be really discouraging and impactful to our causes. Beyond the financial damage (USD 5.1 trillion was the cost of fraud in 2019) we have the negative reputational impact fraud has on our organisations on the long-term, this is harder to measure but it may affect the donor's confidence in us, and it delays turning the cause into reality - which is our primary goal.

NGO Fraud Prevention Statistics

So, where to start? What Non-Governmental Organisations can do to help mitigate Fraud?

In 2019, it’s been reported that only 9% of NGOs have a Fraud Awareness Program, that 34% of the people surveyed from these organisations do not perceive themselves as vulnerable to fraud, and even more importantly, that 54% of the NGOs do not report fraud2. Therefore, our first maxim would be that organisations must become aware that they could all be victims of fraud; and that to attack this issue and mitigate its impact all organizations must work together.

Fraud mitigation does not require expensive technology. It is about understanding the risk of each type of fraud, understanding the current limitations of your organization, and crafting an appropriate response.

Policies, communications, preventive procedures, and building awareness of fraud are critical steps to take, but sometimes these are not effective enough to control the human element of fraud. Hence why, the creation of framework that takes this into account would be key to take our control measures to the next stage.

In our digital seminars held exclusively for NGOs on the 23rd and 25th of March, our Head of Fraud Investigations in the UK, Alex Beavan, analysed how NGOs can start building this framework and shared best practices and tools to help NGOs identify and mitigate fraud.

Please watch & share these free training sessions and help us tackle this issue that is affecting us all.

Module 1 - NGO fraud strategy

  • A framework to help NGOs understand and combat fraud
  • Prevention, detection, mitigation, and remediation
Watch the video

Module 2 – Help mitigate the types of fraud impacting NGOs 

  • The key types of fraud
  • Individual strategies to help reduce the risk for your NGO
Watch the video

2J & Button. M (2019), The Financial Cost of Fraud 2019. The latest data from around the world. Crowe / University of Portsmouth