Lawsonline™ Legal Topics

Charity 101 - Choose the Best & Avoid Scams

Giving to others in need seems to be a natural impulse the world over. Many of us enjoy giving to causes, programs or research that we agree with and believe in; however, sometimes we are caught unaware and are asked to give by volunteers. We may love the idea of the cause but know little about the organization. Or we may like the idea, but prefer it were handled differently. So where do you go to find the best fitting charity and how do you determine if they are legitimate? Below we have compiled some things to consider when choosing a charity, such as when to give, how to avoid scams, and other ways to give to the community rather than a cash donation.

Charity 101: How to choose the best and avoid scams.

Before you Give

What Touches You? - It may sound simple (and it is) but one of the best gauges for choosing a charity should be what you are passionate about. What causes mean the most to you? What charities benefit research, education or programs you believe in? This should be your first consideration when choosing a charity. It will help narrow your choices and there is nothing better than having pride about the organization you choose. Who knows, that initial donation could lead to volunteering and becoming actively involved in something you really care about.
Take Control - Be proactive about the charities you choose to support. Don't wait for someone to come knocking at your door or spend money on reminders in the mail. Instead, take the first step by actively searching for charities that give to the causes you believe in. To begin your search, check out some of these sites:
Charity Navigator | Guide Star | IRS Search
Money 101 - Find out where your donation goes and how it is spent. Most organizations offer easy charts and/or percentages detailing how much money goes to the cause, administration, events, publications, etc. Although you may like the ideas behind an organization, you may not agree with how they choose to spend the money. The only way to know is to check them out and if you can't find the information, practice our next point and ask questions!
Ask Questions - Don't be afraid to ask questions! Perhaps how they spend money on fundraising events is worded ambiguously to you. Or you are not certain if the funds will stay local or move nationally. Any questions you have are okay to ask. Sometimes people don't want to ask as they think they are pestering the volunteers and wasting their time - that is not the case! By thoroughly answering your questions, volunteers know they are ensuring your continued loyalty, confidence and support for their organization. If they don't want to answer, then consider someone else - there are plenty of charities to choose from.
Reputation - Find out about the charity's reputation. Have there been complaints about your charity? Are there accolades for your charity? Take some time to see what others are saying about the charity of your choice.
Better Business Bureau | Charity Navigator
The Quick List - If you don't want to spend the time researching the charities out there, take a look at some of these lists to see how they are already ranked by organizations.
American Institute of Philanthropy | Charity Navigator

When You Give

Dust Off the Checkbook - It is best to donate by check rather than cash or credit card. This way you can specify the money only goes to the organization. Always write the check - don't give any information directly to your bank account. Credit card is okay online if you really know the source is reliable. But be very cautious!
Guard Your Information - As with your bank account information, keep most of your information private. As you will read in the 'Signs of a Scam' section below, caution is unfortunately the best practice when donating money.
Ask if Your Gift is Tax Deductible - Not all charities actually count as a tax deductible donation. Although we realize this is not usually the impetuous behind giving to a charity, it is something to keep in mind if you do plan to claim it on your taxes - especially if it is a sizable donation. The charity representatives won't be offended, just ask.
Get a Receipt - Even if your donation is not tax deductible, get a receipt. This will help you track your records and if you are ever unfortunately caught in a scam, it might help in developing a case against the criminal.
Think Ahead - Consider giving to the charities of your choice once a year or up to a certain amount every year. This will make it easier to choose a charity that you know rather than off the cuff impulse. Also, it will make it that much easier to say no to those who solicit your donations if you know you have already given as much as you want/can for the year.
Give During the Lean Season - Many charity groups often receive generous donations around the holidays and experience lean times during other points in the year. Consider asking your charity when they could best use extra donations to help offset this inconsistency. This may also help you better spread your budget so your holiday expenses for gifts and events don't crowd out the amount you can give to charity.

Be aware of scams in your state! In many states, the Attorney General's Office provides information about charities from how to register and requirements to alerts concerning local scams. However, every state is different. Please see the National Association of State Charity Officials' website for a list of contacts in your state.

www.nasconet.org

Return to Legal Topics Table of Contents

Signs of a Scam

Appearance is Not Enough - Charity scams can be everything from a person with a jar asking for a particular cause to elaborate schemes that include personnel, office space, logos and image branding - all the signals of a legitimate operation. Thus, we say it again, it is important to do your homework before you give.
Know the Name - Many charity scams are set up using names very similar to bigger and better moderated charities. Be careful and take the time to double check that the organization you are donating to is the one you are really thinking of.
The Copycat - Unfortunately, even knowing the correct name of the charity may not be enough. Some schemers (especially in person) will claim to be from an organization they are not. The best option is to check with the charity to see if they are running a drive in your area before you donate.
Opportunity Knocks - The primary way charity scams get your money is by approaching you in person (e.g. at the grocery stores or going door to door), spam emails, and even telemarketing. To be safe, take the information about the charity down but wait to give until you have had a chance to check them out. If they turn on the high pressure "sale" when you mention researching them more, simply walk away. Instead, a legitimate charity will be happy to give you the information about their organization and where to find out more. As for emails, donating to unsolicited emails is never a good idea. Email is only a good option if it is from an organization with which you already have a relationship (usually a reminder to come donate again) or someone you personally know (e.g. participant fundraising for a benefit walk/run/etc.).
Too Much Pressure - Yes we just wrote it above, but it is worth mentioning again - high pressure "sales" from charities is a huge no-no. If they turn up the sob story, guilt trip, or state the need is now or never - be wary and just walk away. Most legitimate charities avoid high pressure tactics and have guidelines for volunteers against such tactics as they are just as glad to have raised the awareness if not always the cash.
Registration Please - It is good practice to ask a charity if it is registered and has a registration number. You can then use this number to look it up with the Better Business Bureau.
Misery Loves Company - Be very careful when giving after a large natural disaster or another event which rocks the community. At these times it is usually best to give through charities that have a standing reputation for helping. But again, make sure to check the name is not a quasi copycat. Be careful how you give the money - even when memorial charities are set up for a local family, you can donate through a bank with an established trust. Try not to let the headlines in the news sway you to give to the wrong person!
Allocation of Funds - Although this is not necessarily a scam item, some donators feel scammed when they find out so little of their money actually goes to the cause of their choice. To avoid this, research the charity to see how they allocate their funds. As we stated above, every charity is different in how it will choose allocate the funds raised. Some charities have high administrative costs and use fundraising to pay staff salaries. Others spend a great deal on advertising campaigns. Although neither is illegal, you may want to see if you agree with the amounts spent. You can find details on the individual charity websites or directories, such as Charity Navigator and Guide Star.
And the Winner Is - Another scam to look out for is the offer of a entry for a prize with your donation. This can usually be related to a scam, but also some legitimate organizations use this tactic. In this instance you may want to consider how much of your donation is going to fundraising gimmicks rather than to the cause at hand.

Other Ways to Give

Your Time is Worth Money - Don't have a lot of cash to give? A little of your time can help just as much or even more for some charities. Many organizations need voluntary workers to make their goals a reality. Most Americans consider donating around November and December when the image of helping out the local soup kitchen is etched in our minds. However, many organizations need help the rest of the year. Contact the charity you are passionate about and ask when you can be the most helpful.
Have time but don't know where to participate? Try some sites like these to find volunteer opportunities in your area. Many of these sites let you search by interest - when volunteers get to share the love of one of their hobbies they are more likely to enjoy the experience and spend more time helping.
www.idealist.org | www.volunteermatch.org |
www.1-800-volunteer.org | www.getinvolved.gov
Take a Volunteer Vacation - Some college students have made headlines by taking volunteer vacations during spring break instead of heading to a party hot spot. But these vacations are not just for college students! Many seasoned travelers find these vacations a great way to learn more intimately about other cultures and give a little back in the process. Whether your passion is people, the environment, culture, language, or all the above, this might be the next vacation for you.
www.globalvolunteers.org | www.volunteerabroad.com | www.globeaware.org | www.earthwatch.org
Play on the Web - Some online stores and searches will donate to charities if you use their interface. So why not take them up on the free offer?
The Hunger, Breast Cancer, Literacy, Rainforest &
Animal Rescue Sites
Consider Giving a Loan - A different way of 'giving' may be to actually lend capitol to the working poor. A new idea in micro financing gives funds to poor families who need a small loan to make their business ideas work. Loans can be as low as $25 and are actually paid back (unlike email schemes). The forerunner in this area is Kiva.org who started in 2005 primarily connecting lenders with 3rd world entrepreneurs. To find out more, visit their website www.kiva.org.
This year, Kiva partnered with ACCION USA and the Opportunity Fund to offer micro loans here in the United States as well. For more on this option, please visit www.accionusa.org or www.opportunityfund.org.