Instances of fraud involving charities or not-for-profit organisations may fall under the jurisdiction of several different authorities. An investigation may be carried out by one authority or multiple organisations working together. Law enforcement authorities responsible for investigating fraudulent activity within the charity sector include:

• The Charity Commission for England and Wales is the primary regulator for charities in England and Wales. The commission can investigate issues related to financial misconduct, fraud, or mismanagement within a charity. Representatives of the commission regularly advise charities on strategies to prevent fraud.
• Action Fraud is the UK's national fraud and cybercrime reporting centre. Individuals and charities can report fraud, including charity fraud, through Action Fraud. The organisation passes cases to local law enforcement officers once it has compiled a report, which can sometimes comprise of many complaints from individuals about the same set of facts.
• The National Crime Agency may become involved in cases where it suspects that charity fraud is linked to serious organised crime, as it focuses on large-scale and complex fraud cases.
• The Serious Fraud Office (SFO) investigates serious and complex fraud, bribery, or corruption cases involving charities. The SFO can conduct investigations and prosecutions but generally focuses on large-scale cases rather than small incidents of fraud.
• HM Revenue and Customs may be involved in investigating fraudulent activity related to Gift Aid claims or tax evasion involving charities.
• The police may also be involved in investigations launched by any of the above organisations, or their own investigations into potential fraud. The police take advice from the Crown Prosecution Service on whether criminal charges should be brought.

Beyond these enforcement authorities, a particular charity may also launch a private prosecution against a person whom it suspects of fraud or theft. All of these authorities are subject to specific rules about the collection and use of evidence. As such, it is important to work closely with a solicitor who can monitor to ensure evidence is collected in compliance with the law.

Those who are accused of fraud against a charity may be charged with any of the following offences:

• Fraud by false representation: this involves dishonestly making a false claim for personal gain or to cause a loss to someone else. It could include falsely claiming to be collecting donations on behalf of a legitimate charity, or misrepresenting the purpose or beneficiaries of donations to deceive donors.
• Fraud by abuse of position: this occurs when someone in a position of trust, such as a trustee or employee of a charity, abuses their role to gain financially or cause a loss to the charity. Trustees misappropriating charity funds, assets or resources for personal use, or to benefit related businesses, are at risk of being charged with this type of fraud.
• Fraud by failing to disclose information: if a person intentionally withholds information that they are legally required to disclose to gain a financial advantage, this constitutes fraud by failing to disclose information. In the charity sector, this can include not disclosing conflicts of interest that could affect how charity funds are used, or failing to inform donors that a charity is no longer active or that donations will not reach the intended recipients for another reason.
• Theft: this means dishonestly taking property belonging to another person or organisation with the intention of permanently depriving the owner of it. Stealing funds directly from the charity’s accounts or misusing physical property belonging to the charity, such as equipment or supplies, may result in a charge of theft.
• False accounting: it is an offence to deliberately provide false or misleading information in financial records. This might be relevant in cases involving an individual falsifying charity accounts or receipts to hide fraudulent activity, or inflating expenses or underreporting income to mislead regulators or trustees. It may be a factor in cases where someone has already been charged with fraud.
• False charity fraud: it is illegal to supply false information to the Charity Commission in order to register for charitable status, or to set up a charity to solicit donations dishonestly. There are several offences that might be used in these cases.

Speak to an expert charity fraud solicitor for advice if you have been placed under investigation for fraud in the charities sector. They can explain the offences you might be charged with and the penalties you are likely to face as a result.

Penalties for charity fraud vary depending on the nature and severity of the offence you are charged with. This could involve both civil and criminal consequences, which may include:

• Imprisonment: those convicted of serious offences, such as theft or fraud, can face significant prison sentences. The maximum sentence for fraud under the Fraud Act 2006 is 10 years in prison.
• Fines: fraud-related convictions can result in substantial fines, especially for cases involving large sums of money or where trustees or senior members of a charity are involved.
• Confiscation of assets: under the Proceeds of Crime Act 2002, the courts can confiscate any assets that have been acquired through fraudulent means. This includes funds themselves, but also any items that have been purchased with these funds.
• Disqualification as a trustee: charity trustees and directors involved in fraudulent activities can be disqualified from serving in the same role for a period of up to 15 years under the Charities Act 2011.

Trustees have significant responsibilities and may suffer consequences even if they are not involved in any fraud. They may be held liable if it is proven they failed in their duty of care to properly manage the charity’s assets, even if they did not commit the fraud themselves. In cases of serious misconduct, the Charity Commission can intervene to remove trustees or impose conditions on how a charity is run.

Trustees can face personal liability for any losses caused to the charity as a result of fraud. This means they may be required to repay the stolen or misused funds. The Charity Commission can also take legal action to recover funds misused or fraudulently taken by trustees or other individuals associated with the charity.

Charities that are found guilty of fraud often suffer irreparable reputational damage, and lose both public trust and donations. They may also lose access to grants or government funding, which can severely impact their ability to continue operating. In extreme cases, the Charity Commission can remove them from the Charity Register (which effectively dissolves the organisation) if it has been heavily implicated in fraudulent activity.

For more minor infractions, the Charity Commission may issue official warnings, impose enforcement actions, or demand changes in how the charity is governed. Charities may also be subject to ongoing monitoring or intervention. If the charity is able to comply with these requirements, there may be no further penalties to deal with.