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Your Guide to Safe Charitable Giving

Don't Get Fooled by a Charity Scam

By

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The most frequent questions I get about charitable organizations are, "How do I know if an organization is legitimate?" and "How do I report a possible fraudulent nonprofit?"

Start first with safety. Don't let your gift fall into the hands of an organization that is at best poorly run and at worst fraudulent.

Here is some help in sorting out which organizations are legit and which aren't:

  • The IRS provides a "search" for IRS approved charities. Don't stop there, however. Even if your charity is listed, you may need to hunt further to get information about how effective and efficient the charity is.
  • You may also verify an organization's tax-exempt status and eligibility to receive tax-deductible charitable contributions by asking to see an organization's IRS letter recognizing it as tax-exempt, or you may call the IRS (toll-free) at 1-877-829-5500.
  • Charity Navigator ranks charities based on their efficiency, transparency and accountability. The rating agency gives charities up to four stars, providing an easy way to find the organizations where your contributions will be safe and effective.
  • GuideStar.org lists 1.5 million nonprofits in its database, all of which have met IRS criteria for exempt organizations. On this site you can find the most recent tax forms that a charity has filed with the IRS. If there are no 990s or no recent ones, that is a good indicator that you may want to stay away.
  • The BBB Wise Giving Alliance is a division of the Better Business Bureau. It provides information about charities, publishes a quarterly guide to wise giving, issues scam alerts, and gives a national charity seal to vetted charities for display on their websites and in their fundraising materials. The BBB also provides a way for you to complain about a charity should you feel you've been misled.
  • Your state attorney general's office is responsible for investigating fraud, including fraudulent practices of nonprofits or groups that claim to be nonprofits. If you have a complaint against a nonprofit in your state, this is the place to go. The National Association of Attorneys General maintains a list of each state's Attorney General with contact information.
  • If you think that you've been solicited by an organization that is illegally claiming to be a nonprofit, you can file a complaint with the Federal Trade Commission by visiting its website or by calling toll-free, 1-877-FTC-HELP (1-877-382-4357).

It is important to note that not all charitable causes are registered with the IRS. If you give to a small, local cause that does not enjoy tax-exempt status, just make sure that you know something about the people who are asking for your money.

Many causes spring up, run their course, and go away. That doesn't mean that they are illegal or fraudulent. When you get your car washed by a group of local high school kids to help them take their band to the Rose Bowl Parade, that may be just fine. Just be sure that the group has the backing of its school or some other community organization.

How to handle telephone and email solicitations:

Telephone solicitations create more cause for alarm as many scams are run in this way, and you could receive spam email trying to get you to donate to an unknown organization. Here are some tips specific to telephone calls and emails from solicitors:

  • Get printed materials from the charity before donating. Fly-by-night scammers are not likely to have any materials.
  • Never provide a credit card or bank account number over the phone unless you initiated the call.
  • Never respond to email solicitations unless you know the organization personally or have opted in to receive its communications. Don't give your credit card information through an email. Go to the charity's website and look for a secured page where you can donate safely. Beware of phishing emails that might look like they are from a charity you know.
  • Be aware that bogus charities may use names that mimic those of well-known organizations.
  • Contact your state attorney general or secretary of state to learn which charities are licensed to operate in your area...or to report suspicious solicitations.

We want you to keep giving--it is a cherished American tradition. Just don't get ripped off...make sure your charitable donation is going where it can do the most good.

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