It seems that new charities pop up every time there is a new natural disaster or economic downfall. Some of these charities are valid organizations that provide valuable services to our communities - others are scams. How can you tell the difference between them and make sure your money is actually going to help people and not just pad someone's pocket? Here are a few tips:
Whether the initial contact with a charity is by phone or email, you, as the perspective donor, have the right to ask questions to help verify their identity. These questions could include:
- Their address and phone number
- Their mission statement
- How the donations are used
- If the donation is tax-deductable
- How long they have been in business
- If the person that contacted is you a professional fundraiser and if so, how much of your donation will go towards their fee
The first thing to do when researching a new charity is to see if they are even allowed to solicit moneys in your state. To do this, you'll have to contact your state's governmental department that regulates charitable organizations and solicitations. If you need help, visit the National Association of State Charity Officials' website for a list of state offices with contact information. You can also use your contact in that office to verify some of the answers you received in the previous step.
Another good source for information about charities is the Better Business Bureau’s (BBB). Their online national and local databases can help you find any complaints against that organization.
Another website to check out is Charity Navigator. Their online database of charities is extensive, with financial ratings, accountability, and transparencies listed for each charity to help you make an informed decision about your donation dollars.
Watch Out For Certain Signs
There are a few signs that you should keep an eye out for anytime you're talking to a charity. If you see (or hear) any of these, turn and run away as fast as you can! It's probably a SCAM!
- The organization uses a name that closely resembles that of a reputable organization. For example, someone may call themselves the "United Avenue" or "Together Way" in hopes that you will associate them with the real United Way.
- Tells you that 100% of the donations go to the cause. This is simply impossible – even the most efficient charities have overhead costs.
- Pressures you to give, either via promising you a special trip, entry into a sweepstakes, award, or even playing on your sympathies.
- Asks for cash-only donations. (You should always pay donations via check so you have concrete proof for your taxes.)
- Asks for your bank or credit card information before you have a chance to investigate them.
- Offers to send a courier or overnight service to collect the donation NOW. (They like to play this one when a natural disaster has happened and there is a general urgency to get help into the region right away.)
- Tries to collect on a donation that you don't remember pledging. Scammers do this all the time, preying on people's forgetfulness in hopes of guilt tripping you into a donation.
Report Any Questionable Charities
If you suspect that a company or organization is really a scam, do your fellow man a favor and report them to your state Attorney General. You'll also want to file reports with the FTC (Federal Trade Commission) and Better Business Bureau. Reporting them will not only protect others from being taken advantage of but ensures that donated money goes where it's needed the most.