DIGITAL fundraising methods can be more vulnerable to fraud raising fears among charities about cashless payments, the charity commissioner has said.
The comments from John Mills follow a review by the Economic and International Affairs Scrutiny Panel, which examined the acceptance of cash payments in Jersey.
The research, which was published earlier this year, documented the continued decline of cash usage – but also public interest in having a choice of payment methods when purchasing goods and services.
The panel concluded that the government should form a policy and strategy “on the role cash is to play in the community”.
One of the recommendations put forward was that External Relations Minister Ian Gorst and Economic Development Minister Kirsten Morel “should consider how charitable organisations can be assisted by the both the Government of Jersey and the private sector including banks, during the transition to digital payments”.
The government accepted the recommendation and stated that Deputy Gorst would be writing to the charity commissioner “to seek further clarification on this issue and understand what action, if any, could be taken”.
In his response to Deputy Gorst, Mr Mills described the feedback provided by charities so far as “not very surprising”.
“While many charities, notably larger ones, well recognise the opportunities digital payment arrangements offer for improving the efficiency of collection of funds, they are also well aware that with new methods come, or could come, new problems and challenges,” he explained.
“These range from practicalities such as the mechanics of a street collection by machine linked to a mobile telephone, or volunteer fundraisers’ familiarity with requisite technology, to serious concerns about security and opportunities for fraud.”
He also went on to highlight the costs associated with a transition to digital systems, including the purchase of new equipment as well as investment in training.
“There is among charities, I would say, a sense of inevitableness of change, not unaccompanied by an element of nervousness about how it will happen and affect how fundraising business is done,” Mr Mills added.
Outlining concerns around fraud and security, he said that, while digital payment systems had the potential to reduce “traditional” risks associated with the handling of cash, they could also introduce “new vulnerabilities”.
“These include cyber security and data protection issues,” Mr Mills continued.
“As you may be aware, there has been a recent trial at the Royal Court of a case where, unbeknown to managers, a charity employee had engaged in fraudulent activity via an online banking system.”
The commissioner also cited a similar case in England that impacted the RNLI, which he described as “one of the largest and seemingly most competent fundraisers of all”.
“What has been revealed is the relative ease with which seemingly robust financial controls could be outswerved by a wrongdoer, discovery occurring but well after the event,” he added.
“Small charities contemplating digital routes to fundraising need to be alert to such things and I am sure it is exactly this sort of thing that would contribute to the general sense of nervousness I touched on above.”
