Charity Fraud
Fraud Alerts
What is Charity Fraud?
Charity fraud is when individuals or groups take advantage of people's goodwill for their own personal gain or agenda. There are different forms of charity fraud, but here are the top two ways to be tricked into charity fraud:
1. Fake Charities
Scammers set up phony organizations that claim to support a cause. They often play with your emotions to get you to donate.
2. Misrepresented Charities
These are legitimate charities that mislead donors about how they'll use the funds that are donated.
What are some signs of Charity Fraud?
Signs of charity fraud can be subtle, so it's important to know what to look for.
Here are some signs to catch a charity scam:
- Unsolicited Donation Requests – Especially donation requests via phone calls or emails.
- High-pressure Tactics – Legitimate charities will not pressure you into providing your payment information.
- Vague Information – Be cautious if a charity refuses to provide detailed information about their mission, programs, and financial records.
Protecting Yourself from Charity Fraud
To protect yourself from charity fraud, it's important to do your research before donating, know where your donation is going, and feel good about your donation – not question its delivery.
To make sure you feel good about doing good:
- Do Your Research – Check out the charity's website, read reviews, and look for ratings from trustworthy sources. Transparency is key, so make sure the charity provides clear financial statements and information about how they allocate funds.
- Donate Directly – Try to donate directly to the charity instead of going through third-party intermediaries or crowdfunding platforms.
- Trust Your Instincts – If approached in public, don't feel pressured to donate. If you feel unsure, wait until you've done your research and feel confident that your donation is going to the right place.
How to Confirm a Legitimate Charity
When you donate, it's crucial to make sure your contributions go to a legitimate organization. Here are some key factors to consider when identifying legitimate charities:
1. Verifying Charity Registration – Before you donate, check if the charity is registered. In the U.S., legit charities should be registered with the Internal Revenue Service (IRS) as a tax-exempt organization. You can use the IRS's Exempt Organizations Select Check tool to confirm their tax-exempt status.
2. Researching Mission and History – Take some time to research the charity's mission and history. Legitimate charities will have a clear mission statement that aligns with your interests. Look for transparency in their activities, achievements, and financial reports. You can find this information on their website or reliable sources like Charity Navigator or Guidestar.
3. Importance of Transparency – Transparency is crucial to ensure that your donations are used as intended. Legitimate charities should be open about their finances, programs, and governance. Look for organizations that provide detailed annual reports, audited financial statements, and clear policies on fund allocation. This kind of transparency builds trust and confidence in their operations.
Watchdog organizations like CharityWatch and the Better Business Bureau’s Wise Giving Alliance tools supply ratings for non-profit organizations based on how much of the raised money is given directly to the intended mission. Wise Giving Alliance suggests that you should support organizations that direct at least 65% of total expenses to the mission, instead of overhead or other expenses.
Beyond doing your research, it is important to monitor your credit card closely and keep records of your donations. Money Management allows you to connect multiple accounts for a complete view of your spending across credit, debit, and savings accounts. Additionally, never provide your private information, like social security number or date of birth, to any unknown entity no matter how worthy the cause may seem.
Reporting Charity Fraud
If you suspect charity fraud, taking immediate action is crucial to protect yourself and others from scams. Reporting suspicious activities and filing complaints with the right authorities helps combat charity fraud effectively. By raising awareness and educating others about these fraudulent schemes, we can prevent further incidents. Here are the steps you should take if you suspect charity fraud:
1. Document the Details – Gather as much information as possible about the suspicious charity, including its name, contact information, and any interactions or transactions you've had with them.
2. Report to the Authorities – Get in touch with your local law enforcement agency or the state attorney general's office to report suspected charity fraud. Provide them with all the details you've collected, and they'll guide you on what to do next.
3. File a Complaint – Visit the Federal Trade Commission (FTC) website or call their toll-free hotline at 1-877-FTC-HELP to file a complaint. The FTC investigates and takes legal action against fraudulent charity organizations.
4. Notify the Better Business Bureau (BBB) – Reach out to your local BBB office to report suspected charity fraud. The BBB keeps a database of scams and fraudulent organizations, which helps protect others from falling victim to similar schemes.
5. Spread Awareness – Educate your friends, family, and community about the signs of charity fraud. Share information through social media, community newsletters, or local events to help others recognize and avoid these scams.