Avoid fraud when you donate to charities this holiday season

Crook-behind-donate-jar‘Tis the season of holiday giving. Charities bring in at least 40% of their annual revenue between now and the end of the year.  In 2012, for example, Save the Children, one of the nation’s most respected charities, picked up almost 69% of its annual revenue in December.

Unfortunately, many of us who think we’re are making charitable donations are actually being defrauded of money that will never go to anyone but the thieves who have scammed us. In New York State, the Attorney General’s office reportedly reached a $700,000 settlement with Thrift Land USA of Yonkers. The fake charity distributed some 1,300 clothing bins in New York and Connecticut, ostensibly so people could donate used clothing to the needy. Instead, the company distributing the bins sold the donated clothing and kept some $10 million.

On the federal level, the scale of charity fraud is exponentially greater. According to a recent fraud case reported by philanthropy.com, the Federal Trade Commission has accused the Breast Cancer Society, Cancer Fund of America, Cancer Support Services, and Children’s Cancer Fund of America, along with several of their executives, of bilking more than $187 million from consumers through deceptive fundraising pitches.

Help your money find the people it should help

Lots of sources offer detailed advice on how not to get scammed while donating to charities. One is called “Tips for Charitable Giving,” published by the NYS Attorney General’s Office. For a shortcut to looking up charities registered in New York, go to charitiesnys.com.

Even better, go to the newly updated site Charity Navigator. The non-profit watchdog has easy-to-understand ratings that will show you, for example, how much the charity spends on programs for the people it serves and how much goes for salaries, administrative expenses, and fundraising. The new ratings for 2,090 charities can be found by clicking on the link in the right column.

Regardless of whether you do extensive research on charities or not, here are a few simple guidelines to avoid any chance of being scammed:

  • Stick with charities you know–Many scam artists come up with charity names that sound similar to those with which people are familiar. It’s easy to see how people could have been tricked into contributing to any of the fraudulent cancer charities mentioned above.
  • Go to the Website of any charities you wish to support, or mail a check to the verified address of the charity–Don’t go through any middlemen.
  • Don’t contribute over the phone–Even if the telemarketer on the other end is legitimate, why give away most of your donation to a for-profit company?  Warns the NYS Attorney General’s office, “[D]onors should know that less than half of the money they contribute through telemarketers is going to the charitable causes they seek to support.” Worse, the person at the other end of the phone may be trying to take advantage of your compassion and generosity, trying to convince you that it’s urgent that you send money right this minute. .
  • Never click on a link in a solicitation e-mail unless you know that you definitely gave that charity your e-mail address.– Even then, it’s safer to go to the charity’s Website to donate.
  • Don’t give cash, your credit card number, your Social Security number, or any financial information to door-to-door solicitors--Ask for printed material. Then, if you decide you want to contribute, go to the organization’s Website.

Unfortunately, scams involving charitable donations are only one type of fraud that’s more prevalent during the holiday season. In our next post, we’ll show you how to recognize and protect yourself from other types of fraud that pop up frequently at this time of year.

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