Avoiding Charitable Donation Scams

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Canny Compassion: Avoiding Charitable Donation Scams

The holidays are just around the corner, and charities large and small are gearing up fundraising efforts, from “Giving Tuesday” appeals after Thanksgiving to soliciting end-of-year tax deductions. (One study found that a quarter of U.S. charitable donations, almost $100 billion total, are made on December 30th and 31st.) It’s fantastic to give back to a good cause. Unfortunately, bad people also try to support themselves on the charitable impulses of others. So, let’s talk about some common scams and how to spot them.

Charitable giving scams run the gamut from appeals that are 100% fake to charities that don’t use money in the way their donors expect. (Never donate to an organization that asks for cash or a wire transfer, or that asks for personal information beyond a normal credit card transaction.) Before you act to help others, take steps to protect yourself and to make sure your donation will be used well.

The Federal Trade Commission (FTC) has issued some new guidelines for charitable giving.

  • Find the best charity for the cause you want to support.

    Instead or responding to the first appeal you receive, identify the cause you want to support and then research the charities that support that cause.

  • Pay with care.

    Pay only by credit card or check and keep records to make sure you’re charged exactly what you agreed to and that there’s no recurring charge unless you agreed to one. For safe online giving, read the FTC’s brochure Donating Through an Online Giving Portal.

  • Be alert for signs of a scam.

    If you’re approached by a charity you don’t know, first check to see if they are a legitimate charity on the IRS Tax Exempt Organization Search.” Also, watch for these red flags:

    • Email or telemarketers thanking you for previous donations that you don’t remember making.
    • Emails that ask you to download an attachment.
    • Appeals that involve entering you in a sweepstakes in return for a donation. (This is illegal.)
    • Charity names that sound similar to, but not the same as a well-known charity.
    • Tele-solicitors who try to rush you into a donation.

Even if a charity is not a scam, it may not make the best use of your donations. Consult the Better Business Bureau’s (BBB) Wise Giving AllianceCharity NavigatorCharity Watch, or GuideStar for lists of legitimate charities. They’ll show you how much of your donation goes to charitable work as opposed to fund-raising and administration. (Any charity should use at least 65% of donations for programs, and the best charities use 90% or more.)

The season of giving is almost upon us, so lead with your heart, but use your head. Give well, give generously, and give carefully.

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