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Even a very low incidence of fraud has the potential to undermine trust and confidence in the Australian charity sector, so it is essential that charities are proactive and vigilant to prevent it. The starting point is to discuss the issue and build awareness, and so the ACNC is delighted to be part of Charity Fraud Awareness Week, this year to be held from 18-22 October. It provides a welcome opportunity for charities, regulators like the ACNC, law enforcement agencies and other stakeholders from across the world to raise awareness and exchange ideas about the best ways to implement strong anti-fraud processes and systems.

Receiving and investigating concerns about charities is a key component of our work to maintain and enhance public trust and confidence in the sector. In 2020-21 we received approximately 2,000 concerns about charities, mainly from the public or members of charities. The most common concerns were about individuals obtaining private benefits from charities or perceived mismanagement of funds. This indicates the level of community interest in an accountable and transparent sector. Fraud occurs when someone acts in a dishonest way so that they receive a benefit or someone experiences a loss. Examples include making false representation, abusing a position, failing to disclose information or using other forms of deception. Fraud can have a negative effect on a charity’s reputation.

It is important that charities promote an ethical culture, have open communication and rigorous processes in place to manage risks and reassure donors and funding bodies that funds and assets are used for charitable purposes, as intended when the funds were given. Our latest Australian Charities Report shows the sector generated revenue of $166 billion, with $11.8 billion in donations. Measures that demonstrate how donated funds are used and meticulous financial practices help to build the confidence upon which charities depend.

There are many processes charities can establish to guard against fraud; finance and human resources are two important areas to focus on. It is critical to develop clear, written financial procedures and to set financial transaction limits and safeguards. Sound recruitment practices must be developed and maintained; staff and volunteers need ongoing training about fraud prevention, including guidance on financial controls, and how to report any suspicions they may have. Our October webinar will outline these and other important processes and systems that charities can put in place. It will direct charities to the guidance, tools and resources that we provide to support strong anti-fraud systems.

Charity leaders, financial and legal advisers, managers, staff and volunteers can all play a part in protecting charities and reporting suspected fraud or other criminal activity. We will continue to support charities in their efforts.

Best wishes,
The Hon Dr Gary Johns