ECCTA failure to prevent fraud for charities and non-profits
Charities and non-profits work through fundraising agencies, grantee partners, trading subsidiaries, and overseas delivery partners, and a fraud committed for the organisation's benefit — overstated impact reporting, misapplied restricted funds, or inflated grant claims — can engage the ECCTA failure-to-prevent-fraud offence. DefenceFile organises the evidence that fraud-prevention procedures existed and operated, so trustees and advisers have an organised, adviser-ready evidence file.
Not sure if you are in scope? Most charities and non-profit organisations that meet the large-organisation size test are in scope — check the size test or the scope Q&A.
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Why charities and non-profit organisations tend to be in scope
Whether a charity meets the large-organisation size test is fact-dependent and reserved for review — many charities will not — but larger charities and their trading subsidiaries can reach the turnover, balance-sheet, and headcount thresholds once group undertakings are aggregated. Fundraising agencies, grant-delivery chains, and UK operations typically broaden both the UK-nexus and associated-person questions worth working through where the size test is met.
Scope is a legal assessment that turns on your group size and facts. See the UK-nexus and scope Q&A and reserve the conclusion for qualified reviewers.
Associated persons to map in charities
An associated person is wider than payroll. These are the relationships worth organising evidence around for this sector.
- Professional fundraising agencies and door-to-door or telephone fundraisers
- Grantee organisations and onward-funding delivery partners
- Trading subsidiaries and commercial-participator partners
- Overseas implementing partners and field offices
- Corporate sponsors and joint-campaign collaborators acting for the charity
Fraud scenarios and the evidence to capture
Illustrative scenarios where a listed base fraud offence could be committed to benefit the organisation. They are prompts for human review, not findings.
Overstated impact, beneficiary numbers, or programme outcomes reported to funders and donors to secure income for the charity.
Evidence focus: Capture the impact-verification, monitoring-data review, and reporting sign-off controls that support outcome claims.
Misapplied restricted funds or inflated grant claims submitted by partners or staff to draw down or retain funding for the organisation.
Evidence focus: Organise the fund-restriction tracking, claim-substantiation, and downstream grant-monitoring records over funded activity.
Diverted or misreported donations and fundraising proceeds routed through agencies or subsidiaries to benefit the charity's position.
Evidence focus: Record the income-reconciliation, fundraiser-oversight, and segregation controls applied to donation and trading income.
What the defence file should prioritise
- A register of fundraisers, grantees, and delivery partners with the controls applied at onboarding
- Attestations from fundraising agencies and partners that fraud-prevention expectations were communicated
- Impact-reporting, grant-claim, and income sign-offs linked to the policies that govern them
- Trustee-board and audit-committee oversight of the charity-fraud risk assessment
Charities ECCTA fraud questions
- Are charities in scope of the failure-to-prevent-fraud offence?
- It depends on size. Many charities fall below the large-organisation thresholds, but larger charities and their trading subsidiaries can be in scope once turnover, balance-sheet, and headcount are aggregated. Whether your organisation meets the test is a legal judgement; DefenceFile organises the evidence so your trustees and advisers can assess it.
- Are professional fundraisers and grantees associated persons?
- They can be, where they perform services for or on behalf of the charity, assessed on all the circumstances. The classification is fact-specific; DefenceFile helps you organise the evidence by relationship so qualified reviewers can decide.
- Are overseas grantees and field partners associated persons under the UK offence?
- An overseas grantee or implementing partner can be an associated person where it performs services for or on behalf of the charity, since the test looks at the relationship rather than location. Whether a UK nexus and the size test are also met is assessed on the facts. DefenceFile organises the grant and oversight evidence so trustees and advisers can reach that judgement.
Related sectors
- Public sector suppliersPublic-sector suppliers and outsourcers carry ECCTA fraud exposure through subcontractors and bid partners. Organise scope, risks, and a defence file.
- EducationUniversities and college groups carry ECCTA fraud exposure through recruitment agents and partners. Organise scope, risks, and a reviewable defence file.
- Professional servicesConsultancies, accountants, and advisory firms carry ECCTA fraud exposure through associates and referral partners. Organise scope, risks, and a defence file.
Keep going
- Failure to prevent fraud: the offence explainedThe statutory offence, the size test, and what a defence file is for.
- Reasonable proceduresHow the six principles map to evidence you can organise and review.
- Failure to prevent fraud: straight answersDirect, sourced answers on scope, penalties, the deadline, and the defence.
- Pricing and pilotsHow a structured pilot review of your evidence works.
DefenceFile organises evidence for legal and compliance review. It does not provide legal advice, create privilege, certify scope, certify reasonable procedures, or guarantee that a statutory defence will succeed.