Let’s be clear — fraud is not a reflection of a charity’s values.
Australian charities operate in a position of significant trust. They safeguard public funds, deliver essential services and support some of the most vulnerable members of the community.
At the same time, many operate in complex, high-trust environments with limited resources. And in doing so, they may find these conditions can both increase exposure to fraud and contribute to any misconduct harder to detect than in many parts of the private sector.
A sector built on trust — and exposed by it
Charities face a unique convergence of risk factors that can elevate both the likelihood of fraud and the difficulty of detection, including:
- lean administrative structures driven by pressure to minimise overheads;
- reliance on volunteers or small teams, often without clear segregation of duties;
- complex funding streams across grants, donations and government programs; and,
- mission-driven cultures where challenging behaviour can feel uncomfortable.
These conditions are not indicators of poor intent or weak leadership. Rather, they simply reflect the reality of a sector stretched to deliver maximum impact with finite resources.
How fraud typically manifests
While the form of misconduct varies, our investigations most commonly involve:
- misuse of organisational funds or corporate cards
- procurement and invoice fraud
- undisclosed conflicts of interest with suppliers
- payroll or expense manipulation
- grant funds used outside approved purposes
- increasingly, cyber-enabled payment redirection scams
Most schemes are not sophisticated — they persist because they go unquestioned, sometimes for years.
Recent Cases Highlight the Risk
There are countless historical examples of fraud against a wide array of Charities, however the two recent matters below illustrate the impact of fraud in the sector.
In Victoria, the former CEO of the Prahran Place Neighbourhood Centre and was sentenced in 2025 after pleading guilty to misappropriating more than $530,000 over a decade. Forensic accountants uncovered years of financial mismanagement including “misappropriated charity funds used for personal expenses including international travel, Disneyland trips, petrol, dance lessons for her daughter, beauty services, Netflix subscriptions and tickets to concerts by Miley Cyrus and Harry Styles”.
Whilst in this case, the defalcator repaid the misappropriated funds (a rarity amongst matters we see), the fraud had ongoing implications for the Charity including reputational damage and the loss of federal funding.
In New South Wales, a reported confidential civil settlement of $150,000 was repaid to the domestic violence charity Women and Children First. The funds repaid were alleged to have been in lieu of funds the then CEO of the Charity was accused of appropriating for her personal benefit.
It was reported that the settlement terms included the Charity agreeing to send a letter to Police advising they were content for the fraud investigation to be terminated.
The matter drew particular concern given the charity’s role supporting women and children escaping violence and the scale of government funding that had been received by the Charity historically.
The real cost of Fraud in Charities
Unlike many commercial organisations, charities cannot absorb losses through pricing or margin.
The impact is immediate and often human:
- reduced services delivered
- fewer resources available to beneficiaries
- erosion of donor and government confidence
- prolonged distraction for boards and management
Often, the reputational and operational consequences outweigh the financial loss itself.
Governance, not size, is the differentiator
Fraud risk is not confined to large organisations. Smaller charities can be more exposed due to:
- concentrated authority
- limited oversight
- informal processes
But, strong governance does not have to mean heavy bureaucracy. It can instead look like:
- clear accountability
- independent oversight
- proportionate controls
- a culture where concerns can be raised safely
Organisations that treat fraud risk as a governance issue — rather than an uncomfortable possibility — are better positioned to respond when issues arise.
That shift simply acknowledges a reality: good people can make poor decisions, and even the most values‑driven organisations need safeguards.
When something doesn’t feel right
Early recognition, calm investigation, and proportionate response make the difference between a contained issue and lasting damage.
One consistent theme across fraud cases is hindsight clarity. Warning signs were present — but not always recognised for what they were.
The earlier concerns are assessed independently, the more options charities retain. Delay often compounds harm.
Fraud is confronting. But ignoring it is far more costly.
Action Guide: Responding to Suspected Fraud
The first 72 hours after a suspected fraud concern emerges are critical. Decisions made in this window can determine whether the issue is contained—or escalates into regulatory, legal and reputational harm.
First 24 Hours: Pause, Protect, Preserve
1. Stop the bleed
- Immediately suspend any activity linked to the concern (payments, system access, approval rights).
- Do not alert suspected individuals prematurely. Consider employment advice in respect of suspension, pending an investigation.
2. Preserve evidence
- Secure financial records, emails, accounting systems, phones and laptops (think about available back-ups, cloud access, hard copies).
- Disable deletion and auto‑purging settings if possible.
3. Limit internal discussion
- Share concerns strictly on a need‑to‑know basis. Casual conversations can compromise evidence and procedural fairness.
4. Keep calm
- Avoid assumptions, accusations or attempted internal “interviews”.
- Many charities unintentionally worsen outcomes by acting too quickly without independent review or advice.
24–48 Hours: Get Independent and Informed
5. Notify the right governance body
- Brief the board chair or audit/risk committee. Document decisions and rationale carefully.
6. Seek independent advice
- External, specialist legal and forensic advice protects objectivity and privilege.
- Independence is critical if regulators or funders later scrutinise the response.
7. Don’t self‑investigate prematurely
- Internal investigations led by conflicted personnel often fail.
- Missteps here can compromise disciplinary action, civil recovery, or referrals to authorities.
48–72 Hours: Stabilise and Plan
8. Assess the scope
- Your forensic account should help you determine what systems, funding streams and time periods may be affected.
- Is this an isolated incident—or a control failure?
9. Consider regulatory obligations
- Charities may have obligations to report to:
- Boards
- Funders
- Insurers
- The ACNC or other regulators
- Timing and wording matter. Early advice avoids compounding risk.
10. Develop a controlled response plan
- Investigation approach
- Stakeholder communication strategy
- Immediate control remediation
- Support for staff and volunteers where needed
