Beware of Charity Scams

Scam artists know that especially in emergencies, many of us are willing to help others by donating to charities. Scammers try to take advantage of our generosity by creating charity scams to rip us off.

Charities play an important role in helping people. In emergencies, they provide food, shelter, and medical supplies. They provide relief for people who are poor or down on their luck. They provide help for the sick and elderly. Charities also promote causes such as health, animals, and the environment. And they provide education and awareness about important issues that affect us all.

To provide these services, charities depend on donations. Because of an increased demand for their help and an increase in costs, charities need contributions. They primarily use telemarketing and direct mail to ask for these donations. This is where the scammers come in.

Scammers love disasters such as hurricanes, floods, earthquakes. They know we want to help the victims and they take advantage of that fact. As soon as disaster strikes somewhere, you can be sure charity thieves are registering domain names and starting to collect money. (For example, there currently are fake charities online for the earthquake victims in Haiti.)

These scammers may set up an official sounding organization, calling themselves something that is very similar to what we know is a legitimate charity. For example, calling themselves the National Red Cross instead of the legitimate American Red Cross. They may carry an official looking ID card with the name of the fraudulent charity and go door-to-door. They may send a request for money in the mail on official looking stationery. Or they email you, pretending to be a legitimate charity, but with a link to their own account.

And because charities are not covered by the National Do Not Call Registry, charity phone scams are common. The scammers know that legitimate charities use telemarketing for fundraising so hope you won’t take the time to investigate if the caller is representing a legitimate charity or a fake charity.

Here are some tips for avoiding fraudulent charities.

• On the phone, ask for the correct name, address, and phone number of the charity. Then thank the caller and look up the number yourself. If the charity is legitimate and you want to contribute, call them back.
• Ask the charity to snail mail you material about their charity. An excuse like “It costs too much money,” is not acceptable. Read about the programs they support and how they are spending their money.
• Do not donate cash – write a check made payable directly to the charity and get a receipt. This is especially true for door-to-door solicitations. Never make a check out to “cash” or to the name of the person in front of you.
• Ask if the charity is tax-exempt under section 501(c)(3) of the IRS code (in the U.S.). If the charity is not tax-exempt, you can’t legitimately deduct your donation on your U.S. taxes.
  
• Legitimate charities do accept online payments, but be very wary of any request for online payments to a Paypal account or a PO Box. A real charity should have a real address. If you have any doubt, call the charity.
  
• Do not donate if you get a hard sell or feel pressured. Words like “now,” “immediately,” or “tonight” are often signs of a fraudulent charity. Along these lines, ignore phrases such as “a suggested contribution of ___ dollars” or “a minimum donation.” Give only as much as you can and want to give.
  
• On the internet, be cautious of people who claim to be disaster survivors or officials who want donations sent via email. And be wary of email attachments that claim to be photos taken in the disaster area. They often contain viruses.
  
• Be on guard if the charity request is for supporting firefighters or police. Call your local police department or firefighters and ask if there is a connection and if the money will be used locally. Even if an organization has the name “firefighter” or “police” in their name, it doesn’t mean the money they are raising will go to those organizations.

There are internet resources you can use to check up on a charity.

The Better Business Bureau Wise Giving Alliance offers two key resources:

• An alphabetical listing of charity reports. By clicking on the name of a charity you can scroll down to a pie chart that shows you a breakdown of the percentage of their money that goes to programs, fundraising efforts, and administrative costs.
• Accountability standards to evaluate charities. These standards are used in the charity reports.

At Charity Navigator you will find evaluations of over 5,400 of American’s largest charities. They have a number of Top 10 lists including:

• 10 Highly-Rated Charities with Low Paid CEOs
• 10 Charities Drowning in Administrative Costs

The American Institute of Philanthropy is a charity watchdog service. It puts out a Charity Rating Guide, which can be had for a small fee. It rates over 500 national charities.

Unless you are familiar with a charity, use the BBB, Charity Navigator, or American Institute of Philanthropy websites to determine if you are being solicited by a legitimate charity or a charity scam.

For information about a different type of scam, please read Elderly Telephone Scams.

For a humorous take on phone scams, read Phone Scams Alert!