As the holiday season nears, both email inboxes and physical mail boxes start to fill up with giving requests from a multitude of charities. Many well-founded charities are legitimately run and purposefully directed. But, much like email scams, Craigslist mishaps and other high-profile misadventures, it's the few charities that traffic in fraud and bogus work that make the headlines.
Charity fraud is a deceitful ruse used by con men and criminals to obtain money from people who are led to believe they're making a charitable donation that will help some individual, cause or group. It involves businesses accepting donations and not using the money for its intended purposes. These non-existent charities are usually given the sheen of a website, pamphlets and other presentation materials to lure contributions from unsuspecting givers.
After the 9/11 terrorist attacks, several fake charities were caught seeking funds for families of policemen and firefighters killed in the line of duty. One example included a man who took in about $440,000 in donations from businesses and individuals in 2000 and 2001, but only paid out about 5 percent of the funds to the killed officers' families. The man was later arrested and sentenced to eight years in prison for his role in running the bogus Police Survivor's Fund.
Because of the seasonal re-occurrence of charity giving every holiday season, people are suggested to be wary of unknown charities seeking money. The FTC's guidelines on charity fraud offer assistance to individuals to be alert to fake charity requests. The commission recommends taking time to become familiar with all aspects of the charity before committing yourself. If the charity turns out to be bogus, there isn't only the loss of money, but there's also a chance for theft of your online identity, as well. Below are sensible tips for charity givers.
Avoid Giving Out Personal Information
Bogus charities will often try to pry personal information from you during a soliciting phone call. If you slip and give away a checking account number or social security number, you may want to immediately engage an identity theft monitoring service like Lifelock or a similar service to help you to maintain control of your accounts online, if the bogus charity's actions turns criminal.
Be Proactive in Charity Giving
Committed donation givers usually have a few respected charities with which they work. Scams and frauds involving charities are usually the case of people reacting to a written plea, a video, an email or a phone call seeking funds. If you know what the extent of your contributions can be, set them up during the year and don't overreact to a potential con charity during the holiday season.
Research the Charity
Find out the charity's website, contact info, head of staff and other contact info. Learn how the charity's programs work, how it raises funds and how much of your contribution will go to operational costs or to the intended recipients of the charity. You can also check the history of the charity with state offices that oversee charities.
Confirm Non-Profit Status
Don't feel guilty this holiday season when you don't drop cash into canisters at store checkout counters, or avoid dropping a few dollars into solicitors' buckets outside the supermarket. Scam artists generally take advantage of these situations and rob you of your goodwill. Be a smart donor instead. Smart givers support charities and organizations that have a tax-exempt status known as section 501(c) (3) of the Internal Revenue Code. You can search for tax-exempt charities at the IRS app for search.
Authored by: Timothy Jenkins. Tim is a blogger who writes about money and investing. He is a wealth manager who lives in the Phoenix area.