Fraud prevention in grantmaking: practical lessons from the front line
By Gino Brancazio, Customer Success Manager, Lightning Reach

Fraud in the charitable sector is not just a risk – it’s a reality. A 2022 charity fraud survey found that 11% of charities had suffered grant fraud and 14% encountered fraud by “fake beneficiaries” – individuals posing as legitimate applicants. Common schemes include identity fraud, where someone applies under another person’s name to divert funds, and fraudulent misrepresentation, such as submitting forged documents or false evidence to exaggerate need. Others manipulate the system through double funding, securing multiple grants. These fraud types not only divert resources from genuine beneficiaries but also erode trust in grant programs.

The cost-of-living crisis and increased demand for support have unfortunately given rise to more opportunistic attempts at deception. At Lightning Reach, we work with grantmakers across the UK to help them prevent, detect and reduce fraud using secure, data-driven tools.

One such partner is The Salespeople’s Charity. I spoke recently with their Executive Director, Laura Garnett, about the kinds of fraud they’ve encountered and how technology has helped them manage risk while remaining compassionate and fair.

Spotting the warning signs

Across the grantmaking sector, certain red flags are emerging as consistent indicators of potentially fraudulent applications. Applicants who refuse to share key evidence often raise concerns, as do profiles with vague or unverifiable information.

Garnett explains, “If someone’s reluctant to share their bank details or link HMRC data, that’s a red flag. We also look at online profiles – comparing their application details to their LinkedIn can be revealing for their employment history.”

A spike in applicants who seem eligible for “every grant going” may suggest mass-application tactics. Other warning signs include copy-and-paste narratives, templated documents, or unusual patterns like multiple applications from the same IP address or home. With the growing use of AI, some charities are also encountering well-written but suspiciously generic applications that lack personal detail or nuance. These signs don’t always mean an application is fraudulent, but they increasingly warrant closer scrutiny.

Leveraging technology for fraud prevention

Technology is playing an increasingly critical role in helping grantmakers prevent fraud without slowing down support for those in genuine need. Digital platforms, like Lightning Reach, can now automate key checks like identity verification and financial assessments via open banking – reducing reliance on easily falsified documents like PDFs or scanned statements. These tools not only improve accuracy but also save significant time for overstretched teams.

Upfront eligibility screening now filters out unsuitable applicants before they reach the manual review stage – saving time and reducing exposure. “Lightning Reach has saved me from manually reviewing 487 applications,” Garnett notes. “That’s 487 hours I’ve been able to put into helping genuine people.”

On Lightning Reach, real-time income and expenditure checks, powered by Open Banking, give a clear picture of applicants’ finances – making it easier to verify need or spot red flags.

“Now we have verified data,” says Garnett, “our trustees feel more confident approving higher-value grants. We’ve nearly tripled our average grant because we trust the process.”

Advice for other grantmakers

On how to tackle this issue head-on, key principles have emerged from conversations with other partner organisations, including the Salespeople’s Charity, including:

• Be vigilant but fair. Desperation can blur the lines, but falsehoods – intentional or not – must still be identified to protect charitable funds.
• Use technology as your gatekeeper. Digital platforms that verify data and automate checks help prevent fraud from reaching your team in the first place.
• Save your energy for those who need it. By filtering out ineligible or suspicious applications early, staff can focus time and empathy where it matters most.
• Share what you know. Reporting to Action Fraud and using shared flagging tools helps protect the whole sector. Coordinated awareness can stop repeat offenders.

What we’re doing at Lightning Reach

From the conversations I’ve had with partners like Laura, it’s clear there’s a growing call for more openness, collaboration, and proactive fraud prevention. Fraud isn’t just an occasional issue anymore – it’s something we all need to be thinking about. Tackling it properly means embracing smarter tools, staying alert while remaining fair, and crucially, sharing what we’re seeing with each other.

At Lightning Reach, we don’t just provide the technology to help prevent fraud – we also want to help connect the dots. That’s why we’re bringing our partner organisations together for dedicated fraud workshops: to share experiences, spot patterns, and build collective strategies. We genuinely believe that by working together, we can protect more funds, support more people, and build a stronger, more resilient grantmaking community.

Interested in finding out more? Get in touch.