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Tips to Avoid Falling for Charity Scams

by Stephanie Wood, The Daily Record, January 2017 As we prepare for the upcoming tax season, many of us will be gathering our receipts for all of the charitable donations made throughout the year. Some may already be looking at what donations they are considering for the current calendar year. It is important to be aware of the scams that exist, targeting anyone and everyone who is interested in helping others. Although this was not one of the top ten scams during 2016 (according to the Better Business Bureau), the Federal Trade Commission warns consumers to watch for an increase in charity scams during 2017.

One name that comes to mind when talking about charity scams is Mr. Bobby Thompson. Sentenced to 28 years in prison in December 2013, Mr. Thompson was convicted of running a veteran’s charity that scammed donors out of an estimated $100 million. The charity was known as the United States Navy Veterans Association. Thompson created a website with photos of himself and nationally known politicians. Thompson also hired fundraising companies to aggressively seek donations in multiple states on behalf of the charity. All donations were funneled directly to Mr. Thompson. Because Mr. Thompson made the scam look legitimate through his website and official fundraising, consumers believed that it was real. Mr. Thompson is one of many individuals out there targeting those who are willing and able to help others. It’s important to be aware of common red flags before making a charitable donation. 

Red Flags

According to the Federal Trade Commission (“FTC”), the following are some common warning signs to look out for when you are considering making a donation to an organization:

  • Little to no details – You are unable to find any information on the organization, no website exists, or the website is very plain, not offering any information on the organization’s mission, who is involved, or how your donation will be used.
  • Cash donations – If the organization asks for cash donations only, not leaving trail or receipt of your monies donated.
  • Wire transfers – Organizations that ask for donations to be through wire transfer.
  • Push for an immediate donation – The organization may request that you make your donation on the spot, not offering you a chance to do any research.
  • Name game – The organization may use a name that is similar to another legitimate organization.
  • No receipt for tax return – Phony organizations are not likely to give you a receipt to use for tax purposes.
  • Newly established organization – Be cautious of requests from organizations that were created in response to a recent natural disaster. 

How to protect yourself 

It is important to do your research before making a donation to a charitable organization, especially if you receive an unexpected e-mail or phone call from someone you have never heard of before.

The following are some tips to think about before making a donation to an organization:

  • It is best to approach a charity directly to make a donation or offer support.
  • Check the organization’s website and do some research if you have not heard of them before.
  • Ask family, friends, or colleagues to see if they have heard of the organization.
  • Check an organization’s credentials. Legitimate charities should be registered.
  • Make sure to get the organization’s name, address, and telephone number.
  • Never send cash, give personal information or online account details. For security and tax purposes, refrain from paying by credit card; it’s best to pay by check.
  • Never open suspicious or unsolicited e-mails from charities. If you click on a link or attachment, you may install a harmful program without knowing it.
  • Instead of donating money, consider a non-cash donation of items such as food, clothing, or equipment.

Several groups exist to help individuals make more informed decisions about charity organizations. They are as follows:

  • Better Business Bureau Wise Giving Alliance: helps donors make informed giving decisions and promotes high standards of conduct among organizations that solicit contributions from the public. See their website, for more information.
  • Charity Navigator: the Nation’s largest evaluator of charities. Their rating system examines an organization’s financial health and their accountability and transparency. They are then rated based on this analysis. These ratings can be found at
  • Charity Watch: founded more than 20 years ago as the American Institute of Philanthropy, it serves as a charity watchdog by digging into the details of charities to determine how your donation will be used to fund programs. The organization also exposes any abusers.
  • Guidestar: Gathers and disseminates information about every IRS-registered nonprofit.
  • National Association of State Charity Officials: an association of state offices charged with oversight of charitable organizations and charitable solicitation in the United States.

If you suspect that you are a victim of a charity scam, a complaint can be filed with the Federal Trade Commission.

Due Diligence

Thankfully, there are several tools out there to aid individuals in educating themselves on the different types of charity scams that are out there. Many of these scammers will try to play on your emotions, claiming to be collecting for ill children or for recent natural disasters. However, it is important to do your due diligence before making a decision to donate to a specific organization.

Stephanie Wood, CPA, CIA, CFE, is a Manager with Stonebridge Business Partners.

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