Check That Charity Before Opening Your Checkbook

by Lynn B. Johnson on April 25, 2013

Americans like to help. In fact, total charitable contributions by individuals, corporations, and foundations was an estimated $298.42 billion in 2011, up 4% from 2010, according to a report from the Giving USA Foundation and the Center on Philanthropy at Indiana University.

Unfortunately, there are people who try to profit from tragedy. In 2009, the FTC launched the “Operation False Charity” initiative in conjunction with Attorney General offices and law-enforcement departments nationwide in order to crack down on “fraudulent telemarketers claiming to help police, firefighters, and veterans.” If you feel that you have been defrauded, you can file a complaint with the Federal Trade Commission.

Despite growing awareness and prosecution, however, the dust had hardly settled on the Boston Marathon bombing sites when reports appeared of fraudulent charities purporting to help those wounded in the attacks.

Tragedy and charities do go hand-in-hand, and it always feels good to help someone hurt in an act of God or act of terror, but it’s important to keep yourself  —and your bank account— safe in the process

Hang up that Phone

The first way you can keep from being scammed by a fraudulent charity is to never, ever, ever donate money over the phone. The Federal Trade Commission suggests that when receiving a donation request over the phone, you should review information on the charity.

The BBB Wise Giving Alliance, a non-profit organization that falls under the same umbrella as the Better Business Bureau system, takes that one step further.

“When a telemarketer calls to solicit a donation from you, ask for them to send you some materials through the mail rather than providing your credit card information over the phone,” said Shawn Van Gorder, director of charity evaluation for the BBB Wise Giving Alliance. “This gives you a chance to take a look at their annual report or other documents before making your decision.”

Investigate the Organization

There are many ways to determine the veracity of a non-profit organization. One is the BBB Wise Giving Alliance, which posts evaluations of nationally soliciting charities based on a set of 20 standards for accountability. Local charities are sometimes evaluated by a BBB in that area; of 150 local Better Business Bureaus across the United States, 50 of them provide local charity reviews.

If the charity that is soliciting your donation does not have a Wise Giving Alliance evaluation, try your state Attorney General’s office. Each state’s Attorney General oversees charitable solicitations in that state. In order to solicit donations legally within a state, a non-profit organization must file paperwork with the AG.

The IRS website also has a searchable database of charities that have received tax-exempt status. Go to IRS.gov and search for “Publication 78.” Van Gorder warns, “This list lags behind, so there may be some new organizations that have been granted tax-exempt status but have not yet been added to the list.”

After destructive events such as the Sandy Hook shootings and Hurricane Katrina,  the IRS does fast-track certain charities to approve them for soliciting, but Van Gorder says it may take a while before that information is available to the public.

Rely on the Ones you Know

Ultimately, you’re usually better off by donating your money to an organization you may have already donated to. Many national charities help in the face of tragic events or national disasters, including the American Red Cross and UMCOR. Sending a donation to an established non-profit that has experience with providing assistance during disasters is generally going to provide a bigger impact. You can use the BBB Wise Giving Alliance, your state’s Attorney General, or the IRS to do more background research on other charities deserving of your dollars. Be wary of new charities and do your research.

“I think the bottom line is that most non-profit organizations aren’t scams, but that doesn’t mean you should let your guard down,” Van Gorder said.

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