When a person responds to a donation request from a charity, they like to think they’re helping to improve the lives of those in need, not helping to pad the wallet of a scam artist. Unfortunately it’s all too common for dishonest people to create fake charitable organizations and solicit donations from unknowing gracious donors.
“One common trick is when an organization uses a name that is similar to a better-known, established charity,” says Michael Whalen, a Criminal Justice and Legal Studies instructor for South University Online Program.
If a charity can’t provide a tax-deduction form, Whalen says to take this as a red flag that the organization may not be legitimate.
Other tax-related warning signs are when the charity isn’t willing to provide you with their EIN number, a letter from the IRS confirming their status as a public charity, or a copy of their last three years of Forms 990, says Sandra Miniutti, who serves as both the vice president of marketing and the CFO at Charity Navigator.
Whalen and Miniutti agree that high-pressure solicitation for a donation request should also be considered a red flag, as charity scam groups don’t want donors to have the chance to conduct any background research on them.
Whalen says there are certain types of charities and donation request methods that are more likely to be a scam than others.
“One favorite tactic is to make telemarketing calls for donations in the aftermath of a natural disaster,” Whalen says. “The images on the TV news and internet are strong motivators for many people, making it easy for a scam artist to swoop in and take advantage of their sympathies.”
Miniutti says it’s important to remember that the victim of a natural disaster isn’t going to be able to contact you directly by phone, email, or the internet.
Other than giving a dollar to the Salvation Army Santa Claus, don’t give cash.
Another tactic used by charity scam artists is to contact a potential donor and thank them for making a pledge, even when they didn’t actually donate any money, Whalen says.
“You’d be surprised how many people will actually donate in that situation, either believing that they forgot they had made a pledge earlier, or simply not wanting to seem cheap by arguing with the caller,” Whalen says.
Miniutti urges donors not to give money or the phone and to be careful when clicking on appeals made through social media, unless you’re sure the source is a legitimate charity.
Charity Navigator has composed a list of other common donation request scams.
SAFEST WAYS TO DONATE TO CHARITABLE ORGANIZATIONS
“Other than giving a dollar to the Salvation Army Santa Claus, don’t give cash,” Whalen says. “Checks are becoming rare in today’s debit-card and online world, but a check provides a paper trail if fraud is later suspected. Any charity that refuses to accept a check, since the act of endorsing the check provides proof of fraud if it really is not a valid charity, should be avoided.”
Not only is it important to know that your intended charity is honest, Whalen says it’s also important to ensure they’re efficient with their money.
“Some organizations spend a lot of their donated money on advertising, salaries, mailers, etc.,” Whalen says. “I recommend asking the organization what percentage of donated money is used for the intended purpose.”
Whalen suggests checking the Forbes magazine rank of 200 of the larger charitable organizations in terms of their efficiency, to see if yours is on the list.
Miniutti advises that the safest way to give charitable contributions is to be a proactive giver.
“Don’t wait for someone to contact you online, by phone, in person or by mail asking for a donation,” Miniutti says. “Instead, flip the process around and take the time to identify well-run charities doing the work you are passionate about supporting. Then give directly to those charities.”
AVOIDING CHARITY SCAMS
Sadly, there have been many instances of charity scams in recent history, Whalen says.
“Feed the Children comes to mind,” he says. “People donated money to this religious organization with the intention of helping starving children. Court records show that the organization purchased a $1.2 million home in Los Angeles, for the purpose of having a base for reaching out to celebrities. They also paid a public relations company $110 million over two years — and the founder of Feed the Children was also on the payroll of the media company in question.”
Whalen says that even the United Way has dealt with scrutiny in the past.
“Many people donate to the United Way during fund-raising drives,” he says. “Would you believe that the president of one local United Way organization had a salary and benefits package of $1,200,000?”
Another example he sites cites is the so-called United States Navy Veterans Association.
“Its website made it seem like a large organization comprised of veterans when in reality, it was run by one person from his home, and he was never in the Navy,” Whalen says. “He managed to solicit $100 million before being discovered and has (since) gone into hiding. It’s also worth mentioning that it was a newspaper reporter, not law enforcement or the government that discovered the fraud.”
If a person suspects they’ve been contacted by a charity scam, Whalen says it’s important to make note of the details of the interaction. He says to write down the name of the caller, the phone number, to take a screen shot of any suspicious emails, and to never open any attachments.
“If you have made a donation and then suspect fraud, contact your bank or credit card company to register a dispute,” he says. “Unfortunately, these kinds of crimes are often very hard to prosecute, especially if they take place long-distance.”
He suggests registering a complaint with the Federal Trade Commission or the National White Collar Crime Center.
“These agencies compile complaint information and use it to support investigations and prosecutions,” Whalen says.