This week, a co-founder of Rainbow Valley was found guilty of defrauding the charity of £86,000 over the course of a decade. Lindsay MacCallum helped to set up Rainbow Valley in 2012 and has been convicted for forging signatures of charity staff and re-routing money from fundraising accounts for her own use. In addition, she was found guilty of embezzling £9,505 from another charity, the Anthony Nolan Trust.

This serves as a reminder that the risk from financial fraud and abuse by individuals working with and entrusted with managing a charity can never be completely ruled out.

The Office of the Scottish Charity Regulator (“OSCR”) has published guidance for organisations on how to identify fraud; the interplay between charity trustee duties and fraud prevention; and a note on how they look at fraud, which can be read here.

The Charity Commission, which regulates charities in England and Wales, has also published useful guidance on dealing with fraud and financial crime, which can be read here.

The guidance reminds charity trustees that they are responsible for the prevention and detection of fraud, even if they delegate some of their responsibilities to charity staff. Charity trustees should also bear in mind that under the Charities and Trustee Investment (Scotland) Act 2005, they must act with the care and diligence that it is reasonable to expect of someone who is managing the affairs of another person.

To manage the risk of fraud, trustees should:

• identify the risks they face from fraud and assess any vulnerabilities;
• document these risks;
• consider how to manage or mitigate these risks as part of the charity’s routine governance; and
• pay attention to fundraising, as a point of engagement with the public.

If you think your charity has been a victim of fraud, you should notify Police Scotland on 101 immediately.

Our experts on Scottish charity law, Emma Maxwell and Emma Manson, are able to assist with any matter relating to the duties of a charity trustee and to advise on what trustees should do to protect their charity against fraud.

As part of Charity Fraud Awareness Week 2024 (25–29 November), we’re excited to partner with the Fraud Advisory Panel and Evelyn Partners to host an event on 26 November at our Edinburgh office. It’s a great opportunity to connect and learn more about protecting charities from fraud. Don’t miss out, click here to sign up!

Related News, Insights & Events