Charity scams exist even though the majority of philanthropies are legitimate aid efforts. The danger of fraud is rampant though for people who may not be savvy about modern ways to donate. An analyst at CharityWatch, Stephanie Kalivas, states, “Make sure you’re channeling it into charities that can really make a difference. There are a lot of bad people who take advantage of people’s generosity.” Listed below are DO and DON’T ideas for giving, yet avoiding charity scams.
- DONT give money to cold callers. Cold calls are usually done by a for-profit telemarketer negotiating a contract that may not be favorable to the charity.
- DO politely hang up the phone without giving any personal data, especially your Social Security number or credit card information when a caller gives precious little time to send in your money.
- DON’T fall for sound-alike names; they are both intentional and accidental with the scammers playing on that, so you think you’re donating to a good charity. Check out a charity. The FTC recommends these sites: CharityNavigator, CharityWatch, GuideStar, and BetterBusinessBureauWiseGivingAlliance.
- DO follow the money by exploring its financial picture. Ask for their Form 990, the informational tax return they submit to the IRS, which they have to give to you if you ask, by law. Look at how the charity uses donated funds. An exception: churches, synagogues and other houses of worship don’t have to file 990s.
- DON’T cave in to sob stories. Unscrupulous solicitors rely on sympathy to make their pitch. Never donate right away; if interested in the cause, ask the caller to mail you information that you can study.
- DO be wary of solicitations after a catastrophe. Avoid charity scams that crop up after a natural disaster, terrorist attack or a devastating accident. Scammers exploit your kindness. For instance, the FBI found 4,000 websites with variations on the name ‘Hurricane Katrina’ even before it made landfall and many were run by criminals overseas. Imagine the number of charity scams after 9/11!!!! Many of those charities went belly up. A recommendation is to go with a charity that has experience in the region of a disaster. Check with CharityNavigator for a list of suggested organizations.
- DON’T give just because the charity sent you a gift. Do not feel guilty. Gifts increase fundraising expenses so money you send will be going towards these gifts. You can just say no to a donation.
- DO look at the charity’s Facebook page. Here you can get a glimpse of others supporting the cause. Keep in mind that the charity is manning its Facebook page and it is probably promotional, showing positive messages.
- DON’T mix up “tax deductible” and “tax exempt.” These terms are not the same thing. Kalivas says, “Any nonprofit is going to be tax-exempt, but that doesn’t mean you’re going to be able to write that off.” If a group has filed as a 501(c)(3) organization with the IRS your donation is deductible. Political action committees (PACs) are tax-exempt but your donation to them is not deductible, because political donations overall are not tax deductible. If confused, check out: IRS Exempt Organizations Select Check and search for your chosen charity.
- DO carefully consider gifts in kind. Contact the charity to make sure your donation of material goods – clothes, food, furniture – is something they can use. Charity scams do exist with in-kind donations, for instance some thrift stores are run by for-profit companies. Goodwill and The Salvation Army are reputable in-kind donation groups.
Use your money wisely and do careful checking to avoid charity scams. For additional information go to: http://www.nextavenue.org/how-to-avoid-charity-scams/
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