Tom Benyon,the ex-MP for Abingdon and founder of charity Zane International, went into the city to change the money into US dollars before a trip to Zimbabwe.
But a gang is thought to have stolen the cash in a scam and police are warning other people to be vigilant.
Mr Benyon, 66, thinks crooks spotted him walking into a bureau de change at Marks & Spencer, in Queen Street, Oxford, on Wednesday, December 23.
Mr Benyon, who also founded the Oxford Community Emergency Foodbank, believes he was then followed into another shop, where he bought a gift for his wife, Jane.
He said: “What purported to be a helpful woman then advised me the back of my coat and trousers had been sprayed with what appeared to be mud.
“She held my coat as I inspected the damage and it was at that time, when my attention was diverted, she stole the money.
“It was clear in retrospect that I’d been watched collecting the money. They knew who to target and what pocket to search.
“The woman appeared to be South American. I would say to people that if they are sprayed, do not stop, go home immediately and call the police.”
Mr Benyon was MP for Abingdon between 1979 and 1983, before the seat was scrapped in boundary changes.
The money had been donated to the charity to pay for doctors, nurses, counsellors and children’s workers in the community, as well as providing other vital services in the troubled corner of Africa.
Earlier this month two women and a man distracted a 60-year-old woman outside the Halifax, at the Westgate Centre, by putting ketchup in her hair. When the woman put her handbag on the floor, one of the gang grabbed it and escaped with more than £4,000.
Oxford city centre Sgt Claire Storry said people changing large amounts of money should be vigilant.
She added: “The information we have suggests that this was a team of people working to distract the man in order to steal his money.
“At this time, we are not linking these two incidents, though there do appear to be similarities to the thefts.”
Police have now seized CCTV footage from the stores and will be studying it with Mr Benyon on his return from Zimbabwe.
Sgt Storry added: “If anyone saw this incident, then I would urge them to come forward and speak with us.”
Anyone with information should call police on 08458 505505 or Crimestoppers on 0800 555111.