Over a third of charities reported incidents of fraud or attempted fraud in the last year, posing serious financial problems for the UK’s third-sector. Three-quarters of charities said they suffered financial loss due to fraud in 2025, while of those only a third recovered losses.
Total value of charitable donations in the UK equalled their post-pandemic high in 2025. However, according to data released by His Majesty’s Revenues and Customs (HMRC), the volume of people donating declined, raising concerns as to how sustainable this rise would be in the long-term. Elsewhere, the biggest survey of pension scheme funding in the UK third sector – carried out by First Actuarial, a Gallagher company – recently took in data and insight from 300 UK charities. It found that around seven-in-ten have less than £10 million in their defined benefit scheme, leaving them open to higher running costs and limited insurance options.
With finances so finely balanced for many non-profit sector organisations, fraud is a cost few can afford. But according to BDO’s Charity Fraud Report, which surveyed over 160 leaders from UK charities, 34% have reported incidents of fraud or attempted fraud in the last 12 months. While that represents a fall from 42% last year, a concerning 38% of the perpetrators were individuals from within the charity.
Source: BDO
This misappropriation of funds – of which 23% of firms said was the most recent fraud they had encountered – can damage public trust in charities, and make it more difficult to receive funds. While the level of insider fraud has fallen since the survey began five years ago, the consequence of reputational damage has doubled in the last year.
In addition, 73% of charities suffered a financial loss due to fraud in the past year, with only 32% of them recovering losses. This suggests that whilst fewer incidents of fraud are taking place, their impact is far greater and the risk to the erosion of the public’s trust should remain at the forefront of fraud prevention measures.
Looking ahead to the next 12 months, cyber-attacks were cited as the biggest concern, particularly in light of high-profile cases such as Jaguar Land Rover, M&S, Harrods and the Co-op, which resulted in significant operational disruptions and data security concerns. At the same time, despite improvements in fraud awareness and fraud prevention among charities over the last five years, 52% expect the threat of fraud to increase in 2026.
Fiona Condron, national head of charities at BDO, said, “The Charity Commission’s Sector Risk Assessment 2025 highlights fraud as a key sector risk and the Commission’s casework indicates that external frauds target those charities with high incomes and are opportunistic in nature. The Charity Fraud Report aligns with this view and emphasises the need for continued vigilance.”
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