I clicked onto Third Sector’s website last week to read the charity news. It’s a sad sign of the times that two of the first three stories were damaging for the sector. Even sadder was that they were both about fraud. It’s not unusual. I began to think, is the charity sector just more vulnerable to theft? Possibly, possibly not. I really don’t think it matters whether it is or not. And here’s why.
The story that caught my eye first was Anne Yaman, 63, who just picked up a four year stretch at Her Majesty’s pleasure for stealing over £100,000 from her former employers, the Bentham Development Trust. On the back of this, I did a quick Google search for “charity staff fraud” and pulled up this list of names. Before you start reading, have a guess how far back this list goes:
- Lorraine Warden, 43 – After admitting to embezzling £55,000 from Ninewells charity fund, she can expect a custodial sentence next month
- Steven Neul, 45 – The former senior officer at Shoreline Housing Partnership was arrested after fraudulently ordering over 300 iPhones and iPads to sell for his own gain, valued at over £170,000. He’s awaiting sentencing with "all options open" to the judge
- Craig Whittingham, 23 – Convicted of taking £133,000 from Mind Taunton and West Somerset, almost a quarter of their annual turnover, the Judge has just given him two years in the big house
- Lynn Donovan, 43 – After pleading guilty to stealing £11,000 from the Wirral Toy Library by writing 21 fake cheques, she received a sentence of eight months
The list goes back just one month, even though the crimes were spread out across a few years. All of these stories were from the first two pages of my search.
The sector is appearing pretty vulnerable now. Certainly, it’s almost impossible to ‘pre-identify’ a thief. Notice a pattern from the above? I don’t. Three to two in favour of women, most were middle-aged but one older and one younger and they’re from up and down the country.
You could also argue charities are sitting ducks for stealing. There is a lure for a would-be thief of easy access to money in an environment where it doesn’t actually belong to anyone there. Surely it would be easier to defraud a charity than a small business where all the money belongs to an over-zealous owner?
In addition, is there less chance of your actions being challenged in a charity? Or do charities suffer more from opportunist thieves, suddenly surrounded by fluctuating levels of income that is difficult to track, impossible to predict and easy to hide (collection buckets is just one example that springs to mind)?
You can just as easily say the sector is not more vulnerable. Trustees can be an investigative and diligent bunch, as are senior managers, while past history (or a Google search) should be a huge red flag to charities in the fight to take care of their cash. It’s also worth pointing out that is quite possibly happens in every industry all the time, but we hear less about that because theft from charities is more newsworthy. ‘Man steals £50,000 from Sports Direct’ is probably less likely to boost an editor’s newspaper sales than ‘Charity worker steals £25,000 from sick children’s pockets’.
We’ll perhaps never know. For me though, it doesn’t matter. How vulnerable the sector appears is actually far more important than how vulnerable it is and right now, it’s looking pretty leaky. I’ll explain. Vulnerability can be fixed quickly, but a reputation cannot. Who wants to give to charity if it looks like someone will steal it anyway? When a large theft is reported, how many donors are thinking ‘that’s my money that I gave to fight cancer, not fund a holiday to the Tropic of Cancer’?
Trust in the charity sector is already at its second lowest in six years, with barely half of the public trusting it ‘quite a lot’ or ‘a great deal’. Our data also shows that people’s main reason for not giving to charity is ‘not enough money going to the cause’. Regular thefts of six figure amounts are hardly likely to help with either of these. Furthermore, they will continue to undermine any attempts to improve the situation.
Every time someone is convicted of stealing from a charity, the sector takes a knock. Often it’s unavoidable – people do steal. But what troubled me further about these stories is that they included no strong statements from charities. Where was the “we quickly identified that the person was stealing and immediately reported them to police.”? Which safeguards do charities have in place to stop it happening? And afterwards, what are charities doing to stop it happening again?
The reality is people will steal and many of them are probably caught. But when it comes to donors, their perception is their reality.
So what are we going to do about it? Or more importantly, what are we going to show people we’re doing about it?
Have I stolen a march here? Or have I gone against the convictions you hold? Leave us a comment below.
One good and simple idea
One good and simple idea would be to have a sector-wide poster that goes up on every charity's staff noticeboard saying that stealing from a charity is a lowest of the low crime, and stating the charity will prosecute anyone caught stealing from the charity and that there are systems in place to monitor theft. People reading that every day, may think twice about doing it and will definitely reduce the number of thefts.
I don't think that there is
I don't think that there is evidence that the nonprofit sector is any more susceptible to theft, but when it happens, there is more coverage. It's not unheard of in the private sector for theft to be covered up because of potential commercial embarrassment. An externally funded nonprofit does not have that option, not least because significant theft often brings the organisation to its knees or worse. We've had a recent example of this in Wales. I think that there is an issue about financial control and a possible over-reliance on trust. Finance is part of the overhead and many small-to-medium sized NPOs have minimal financial infrastructure - a volunteer treasurer, a chief officer with no financial qualifications and a generalist administrator who, among many other duties, keeps the books. Sometimes they might have a single specialist staff member. Plus most of us work on the assumption that our colleagues are honest and can be trusted, and most of the time this is true. However this approach can also undermine what financial governance there is. At the core of quite a lot of NPO fraud is a senior manager - paid or volunteer - signing off on an expense claim or credit card bill, without checking. There was an incident in Ottawa last year where a staff member was using a card for the high life and helping to fund her boyfriend's Haitian presidential campaign. Someone countersigned those statements.
Trust is not the same thing as financial governance and financial governance is not the same thing as a lack of trust. Procedure protects everyone. Managers who authorise spending should take the time to check what they are signing and the rules should be reviewed on a regular basis. Talk to your auditor, because even if a theft doesn't break your organisation financially, it may never recover its reputation.
The Wirral case is odd
The Wirral case is odd because the offender is qualified to teach judo and swimming to all ages. She embezzled the money to pay household bills, yet she could have earned it simply by using her skills to train others. Instead, she took the lazy way out, which seems strange given the energetic disciplines in which she'd been involved.