Charities robbed by gambling fraud

Staff with gambling problems are stealing millions of dollars a year from not-for-profit organisations.

Research carried out by BDO Kendalls for it's "not-for-profit fraud survey 2008" of organisations in Australia and New Zealand revealed that 53% of the money stolen in the sector was to fund gambling.

This compares with the 22% of fraud and theft to finance gambling that the 2006 KPMG forensic fraud survey of business found.

People working in the not-for-profit sector who stole to fund their gambling took an average amount of $180,643 which is significantly higher than for any other reason.

On average $45,556 was stolen by people to maintain a desired lifestyle and $13,150 stolen because of financial pressures.

The report also notes that losses are unlikely to be recovered from a person with a gambling problem because they will have minimal funds available. In contrast a person who commits fraud to maintain a lifestyle may have assets such as a house, a car or a boat that can be utilised to recover the loss.

John Stansfield, CEO of the Problem Gambling Foundation, says he knew the figure would be high but is shocked that gambling related fraud is hitting charities even worse than the private sector.

"Effective charities are very dependant on trust," he says.

"The public and funders need to have confidence that they are using funds wisely and clients need to feel the organisation helping them has integrity.

"Charities are able to deliver results that neither the public nor private sector can partly because they develop a culture of trust, understanding and co-operation both internally and externally."

"Fraud and theft by employees undermines these relationships and poses a real threat to credibility and effectiveness of the whole not-for-profit sector."

Mr Stansfield challenges the idea that gambling funding can be cleansed by using it for charitable purposes.

"Let's look at what's happening here," he says.

"Problem gamblers impoverish themselves and commit crimes to pay for their gambling. They often end up going to charitable organisations for help.

"Some of these charitable organisations have become dependant on gambling funding. At the same time some of their employees are developing gambling habits and stealing off them to meet their losses.

"It's a perpetual cycle of harm where individuals and families are being hurt and community organisations are placing themselves in moral jeopardy and at risk of undermining both public confidence and their internal culture of trust.

"The only winners are the gambling operators who continue to clip the ticket on each transaction regardless of the consequences."