One in three UK charities were targets of fraud in 2025, and whilst this is the lowest level in five years, the impact fraud has on reputational damage, financial loss and internal fraud remains a top concern. To mitigate the future risk and impact of fraudulent activity, there are several meaningful steps charities of all sizes can take to build resilience and safeguard their resources.

What are the emerging trends in charity fraud?

Survey results from 164 UK charities¹ show that fraud affected 34% of organisations in 2025. This is a noticeable improvement upon 42% in 2024, representing a strengthened collective commitment to tackling fraud risk. However, it also highlights that fraud remains a prominent threat.

The most common types of fraud in 2025 were broadly consistent with the previous year:

• Misappropriation or theft of assets, including cash (34%)

• Payment diversions (27%)

• False expense claims (25%)

The elevated cost of living continues to be a key factor, with 62% of respondents believing that economic challenges have increased fraud risks by pushing financially pressured individuals towards fraudulent activity.

Of the charities that experienced fraud in 2025, 72% reported suffering financial losses, down from a peak of 92% in 2023. This is a positive sign that fraud prevention measures are taking effect. However, the financial impact on charity funds remains – average losses per case ranged from £11,000 to £110,000 and only 32% of charities were successful in recovering the funds lost, compared to 40% last year.

Charities are also attuned to the non-financial repercussions of fraud, felt by 75% of affected charities. Reputational damage and decreased morale are seen more often in the aftermath. These effects can be long-lasting and profound, especially in a sector that relies heavily on public trust and on the confidence placed in its employees and volunteers.

Looking ahead, cyber-enabled fraud, phishing and AI threats are trustees’ primary concerns in 2026 despite representing only 11% of cases in 2025. This is likely driven by the media attention given to high-profile cyberattacks. The most common types of fraud listed above are expected to remain prevalent.

Who are the perpetrators?

Fraud in charities may arise in various forms, from the mismanagement of funds to embezzlement and cybercrime, and may originate from several sources.

Troublingly, the survey identified that there is a sustained risk of fraud originating inside the charity: 38% of all fraud committed is perpetrated by staff, volunteers and trustees. Although this is down from 50% in the previous year, a greater proportion of charities reported they were unsure of the perpetrator’s identity, rising from 9% to 20%. This indicates that fraudsters may be more adept at concealing their identity, such as by using advanced technologies. By contrast, only 23% of frauds were committed by people with no connection to the charity.

About half of charities anticipate fraud risk will increase during 2026. This scepticism highlights a need for trustees to ensure that there are adequate anti-fraud measures in place to prepare for challenges to come.

What should you do?

There are several steps that charity leaders can take to reduce the risk of fraud within their organisation. These include:

1. Strengthen controls: Financial controls such as authorising payments, approving expenses and having a regular external audit are essential to safeguarding funds.

2. Increase fraud awareness: Providing training for all staff, volunteers, and trustees is crucial for identifying fraud and following proper reporting procedures.

3. Leverage technology: Secure online portals, fraud detection software, and encryption to protect sensitive data from cybercriminals are some of the ways to deflect potential threats.

4. Establish policies and response plans: Responsibilities must be clearly defined when it comes to fraud risk, including a clear action plan for handling suspicious activity.

5. Promote a culture of transparency: Charity leaders must actively foster a safe, fraud-aware culture where staff are encouraged to speak up about concerns.

¹ BDO’s 2025 Charity Fraud Report

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