Fraud Survey Response

If the Not for Profit sector doesn’t start talking about self regulation now, it will be forced into it by governments and the general public. That’s the strong message following the release last week of the first Australian survey into Fraud in the Not for Profit Sector.

The survey found that instances of fraud in the Not for Profit sector are well below fraud in the wider commercial sector according to international accounting and advisory firm BDO.

However that doesn’t mean there’s room for complacency according to Philanthropy Australia’s CEO, Gina Anderson.

Anderson says that fraud is in every sector and if organisations don’t start to address it in the Not for Profit sector, regulations it will be forced upon it.

Anderson says that a few scandals in recent years have started to break down the trust the public has had in the NFP sector generally. As a result the sector needs to start talking about the implementation of codes of conduct, standards and ethics in fundraising, reporting, and benchmarking things like cost of fundraising – particularly when we manage other people’s money.

She says the sector also needs to start talking about accreditation, particularly for those who manage other people’s money – whether they are running a charity, NFP, a corporate foundation and giving program, or a foundation for someone else.

She says this is something we need to work at across the sector and will need to involve universities and courses offered by Registered Training Organisations and the type of practical practitioner-led seminars and workshops held by organisations such as Philanthropy Australia and the Fundraising Institute of Australia.

Anderson says the public is increasingly demanding greater knowledge of organisations, their staff and their programs, before they give their money.

Other sectors have already been through this process warns Anderson and says that it is only a matter of time before this becomes regulated and the sector should be prepared.

Fraud survey author and BDO partner, Lisa Bundesen, says nearly 90 per cent of reported frauds in the sector are under $50,000 compared to an average fraud of $337,734 in large organisations in the public and private sector.

Bundesen says that while fraud is recognised as an issue in the $33 billion NFP sector, the sector as a whole performed extremely well both in the level of fraud currently occurring and the steps being taken to reduce the likelihood of fraud occurring in their organisation.

The survey was produced in conjunction with the Not-For-Profit Network a Queensland based organisation providing specialist NFP services, and the Queensland University of Technology.

A total of 547 responses were received from the Not for Profit sector survey which took place over three months from October 2005.

The Fundraising Institute of Australia says as the first report into the level of fraud in the Australian sector it is a valuable document.

FIA CEO Sue-Ann Wallace says the FIA has a major role in 2006 and 2007 in developing principals and standards of practice for fundraisers.

Wallace says it appears that most of the fraud had happened at an administrative level which highlights the need for measuring practices and procedures using internal and external audits.

She says no code of conduct will absolve organisations from sound accounting procedures and constant checking.

If you would like an electronic copy of the full report in PDF format just send us an email with the words “DBO Not for Profit Fraud Survey 2006” in the subject line to
probono@probonoaustralia.com.au.