Charitable Donations: 4 Tips for Safe Giving
It's important to ensure that your donated dollars are going to the right place and being used appropriately. Use these four tips to help tell the difference between a reputable organization or a fraudster.
1. Research the charity's reputation
Technology has made it very easy for scammers to create sophisticated websites, launch robocall campaigns, and troll for dollars via text message or social media. Before donating money, spend some time researching the organization to ensure it's authentic.
- Look up the charity on a government or watchdog site like the Better Business Bureau (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar. Be cautious if a charity isn't listed, but also know that a non-rating isn't necessarily an indicator of fraud. To vet these entities, Charity Navigator suggests asking for the nonprofit's IRS-issued employer identification number (every organization should have one) and then reviewing its annual Form 990, which details its finances and governance practices
- Check out the organization's website and carefully review the web address. Swindlers sometimes create sites that appear almost identical to that of a well-known, credible charity. Look for small misspellings or sound-alike names, and note the URL (most charitable sites use .org instead of .com)
- Research social media requests, even when it comes from a friend. A well-meaning family member or colleague may have been duped and unknowingly passed along a fraudulent request. Don’t assume crowdfunding sites are legitimate, ask the person about the information they shared or donate directly on the charity’s website.
2. Be wary of door-to-door, telephone, and email solicitations
Sophisticated scammers know how to replicate the practice or appearance of a bona fide charity whether in person, over the phone, or through an email request. In-person appeals can be particularly difficult to research, especially since practiced door-to-door solicitors know how to make small talk, develop rapport, and apply the subtle pressure that could lead to an on-the-spot “donation." Look for these red flags:
- A canvasser with no identification, badge, or marketing material. Always ask for the name, address, phone number, and registration number of the charity. Then, verify the information later, after the canvasser has left your property.
- A canvasser who pushes for a cash-only donation. Instead, mail a check or make a credit card donation directly to the charity—and not to the person standing in front of you.
- An unsolicited donation request via email. Most charities don't use email to pursue first-time donors (but many may use it for repeat requests).
- A telephone solicitor who pushes for an immediate donation. Instead, tell the caller you'd like time to research the organization before making a final decision
3. Find out how charitable donations are spent
Before giving, know how much of your donation goes to the program you want to support. Even the most benevolent charities must pay their staff and overhead costs. But some charities allocate a greater percentage of a contribution to the cause in question than others. Charities on the up-and-up will set aside no more than 35% to administrative costs. Ideally, that number should be less than 25%. This information can be found on an organization's IRS Form 990, which can often be found on GuideStar’s searchable database.
4.Report unscrupulous activity
If you uncover a scam, report it to the Federal Trade Commission and your state charity regulator. Share any information you have, including the name of the charity or fundraiser, contact details, and even the specifics of the fraudster's pitch. By sharing the information, you may help shut down sham organizations, which can increase the ability for donated dollars to get to their intended recipients.
Your charitable gift can have a powerful impact. That’s why it’s so important to ensure that the organization you plan to support is reputable and your money is going to help those in need. By following these four tips, you can feel confident that your donation is making a difference.