Avoiding Charity Fraud

The thought of someone pocketing a charitable donation unthinkable. However, there are some for-profit organizations or individuals that seek to do just this. Charity fraud does exist, and it’s not always easy to recognize. Many scammers posing as charities use tactics or names that are like real charities, but use donations in an entirely different way. To protect yourself and your checkbook from charity fraud, always do some research before giving to a charity or fundraiser, and stay on the lookout for charitable red flags as well.

Warning signs

If you notice any of the following warning signs when dealing with a charity, consider taking a closer look at its activities.

Pressure tactics.

Legitimate charities should not pressure you to donate without allowing you time to think about it and do some research on the organization or cause. Having a charitable budget and strategy can help you avoid giving into on-the-spot pressure, since you will be less likely to give without consulting your budget first.

Claims of past giving without evidence.

Many scam artists will thank you for past donations or claim that you’ve already donated to trick you into thinking you are already familiar with the charity and make you more willing to donate again. If you don’t remember donating and can’t find any record of it, chances are this is a fraud tactic. Keeping good records of your charitable donations will make recognizing this kind of fraud much easier.

Contributions in exchange for sweepstakes entries.

If a charity guarantees that you will be entered in or even win a sweepstakes contest in exchange for donating, it is likely fraudulent. By law, you never have to donate to be eligible to win a sweepstakes.

Names that are very similar to famous charities.

Names that sound like famous charities but have a word or two different often rely on name recognition to entice well-meaning donors into giving them money.

Solicitations soon after crises or disasters.

The time directly after a natural disaster or national crisis is a time when many choose to give, and charity scam artists know this. After Hurricane Katrina, the FBI reported over 4,000 fraudulent websites that were trying to collect people’s money and personal information. If you do want to give to a charity that provides disaster relief, make sure it’s an experienced one. There is a large amount of logistics involved in getting aid to victims, so you’ll want to choose a charity that has proven success and a legitimate background.

Chain donation letters.

A legitimate charity should not ask you to forward its email to all of your friends and relatives, as it will have other avenues of reaching these people.
Offering to send a courier or overnight delivery service to collect your money.

This is often a sign of illegitimate charities, as they’re eager to collect your cash as soon as possible.

Requesting you send funds to a foreign bank.

This should raise immediate suspicion for two reasons: first, you should always be able to send funds to the charity itself, and second, donations made to foreign organizations are usually not tax deductible. Refusing to provide information.

Any legitimate charity should be able to tell you, in detail, about its identity, mission, costs and how the donation will be used. If they can’t readily answer these kinds of questions, it should be cause for suspicion.

Insisting that you donate with cash or asking you to wire money.

This should make you wonder why a legitimate charity won’t process a credit card, and why they are so eager to get cash from you immediately.

Asking for your Social Security number.

The IRS advises not to give out personal information, including Social Security numbers, credit card or bank account information to anyone who solicits a contribution from you. Scam artists can use this information to steal money and to potentially steal your identity.

Preventing fraud

Now that you know how to spot potential charity fraud, learn how to defend yourself against it.

  • Always make checks out to the organization, and never toan individual solicitor, even if they ask you to. Remember that donations to individuals are not tax deductible (and in the case of fraud, aren’t ethical).
  • When entering any personal information, make sure you’reusing a secure website. You can see that a site is secure because the URL will have https:// before it rather than just http://.
  • If you receive a solicitation call that seems odd, hang up,find the charity’s number yourself and call to see if the solicitation was authorized by the charity.
  • Avoid clicking on links within email messages—many linkto fake websites or contain viruses. If you receive an email from a charity you may be interested in, search for it outside of the email first. Keep in mind that most valid charitable websites will end in .org, not .com.
  • If you receive a solicitation that interests you, request thatthe charity send you written information before you donate.
  • Ask if the person calling is a professional fundraiser and, ifhe or she is, what percentage of your donation will go to paying them rather than to the charity.

Reporting fraud

If you have concerns about the legitimacy, integrity or practices of a potential charity, you can contact one of the following:

  • Your state’s charity office. This is typically a part of the Office of the Attorney General or the Office of the Secretary of State.
  • The IRS. You can use their “Exempt Organizations Select Check” to see if a potential charity is a legitimate tax-exempt organization, or you can call them for more information.
  • The Federal Trade Commission, local Better BusinessBureau or Better Business Bureau Wise Giving Alliance. All provide online complaint forms to notify them of a potentially fraudulent charity.
  • Local law enforcement. If you believe you’ve been a victim of fraud, contact your local law enforcement agency.