Thousands of crimes targeting Australia's not-for-profits are going unreported, a detailed study into not-for-profit governance has revealed.
The Institute of Community Directors Australia’s latest Spotlight Report examines the impact of fraud and cybercrime on not-for-profit organisations.
ICDA Spotlight Report: Fraud & Cybercrime, informed by a nationwide survey of nearly 1900 community leaders, shows that one in five organisations suffered a crime of some sort in the year leading up to the survey.
Applying those figures to the estimated 600,000 not-for-profits in Australia – many of them small organisations with limited resources – would suggest as many as 114,000 organisations nationally have been affected by fraud or cybercrime.
Yet nearly two-thirds of those crimes are not reported to police, according to survey results, and just one in five is reported to an insurance company.
According to the study, asset theft and cyber-hacking are the most common crimes suffered, followed by credit card fraud and cash thefts.
In about a quarter of asset theft cases, the perpetrator was either a staffer or a volunteer.
Cash thefts were the most likely to be reported to police.
Other serious crimes, such as payroll fraud, bribes, data theft or ransom, or expenses fraud were reported by less than 3% of organisations.
Most credit card fraud (59%) and cyber attacks (53%) were perpetrated by online criminals.
In a concerning result, the study found that up to 20% of crime-affected organisations reported suffering multiple criminal incidents in the past year.
One of the experts in handling how these cases come to light is Your Call, an Our Community partner, which provides an external whistleblowing service to businesses, not-for-profits and charities.
They cite research showing that the largest proportion of fraud uncovered by organisations comes from staff whistleblowers.
Your Call CEO Nathan Luker said the latest Spotlight study carried significant short- and long-term implications for organisations.
“Numerous risks face any not-for-profit that does not tackle crime and fraud properly. These risks include – and are not limited to – reputational, commercial, funding, cultural, leadership, legal, regulatory, safety and performance.”
“Not reporting crime corrodes an organisation’s culture and sets its ethical standards amongst its employees and volunteers. It is how leaders act ‘in the shadows’ which truly matters,” Mr Luker said.
He said with up to one in five not-for-profits experiencing crime, a good whistleblower plan is essential.
“Whistleblowing plays a crucial role to both deter and detect crimes and misconduct. Providing an avenue to report misconduct or illegal activity via a range of reporting pathways – including anonymously and externally – can cultivate a ‘speak up’ culture.”
He said the other side of that coin is a culture in which members of an organisation know that the organisation will not tolerate misconduct.
The Spotlight Report series analyses the views of not-for-profit leaders who responded to ICDA’s national Not-for-profit Governance Survey 2019. The resulting studies are produced by the Innovation Lab. Past Spotlight reports have addressed board and CEO performance, the role of the chair, and not-for-profit impact and data.
ICDA will release further insights in stages, with the full release of all data later this year.