Beware charity scams!
Disasters, like the recent earthquake and tsunami in Japan, typically spur an outpouring of charitable giving by people wanting to help. So too, scammers surge in disaster’s wake, seeking to make a fast dollar by exploiting others’ generous impulses.
Thousands of charity scams arose after the 2005 Hurricane Katrina, for example. According to an article by Forbes Magazine Senior Editor William P. Barrett posted last year on the magazine’s website, “The problem was so big that federal authorities formed a Hurricane Katrina Fraud Task Force to investigate and try to stop the fraudulent pitches.”
Older adults are often the targets of such scams. Their generation is thought to be more trusting. Many have built up savings and investments over the years, and so have a lot to lose, according to Philadelphia Corporation for Aging.
Barrett offers a number of suggestions to avoid the charity scammers, among them:
• Ignore unsolicited e-mail requests and be wary of bogus charity websites. Scammers often set up bogus websites and link to them through email solicitations, he says. Many of these fraudulent websites have similar names to those of well-known organizations, but are really scams to get a hold of your credit card and other financial information.
• Avoid charities you've never heard of. Instead, stick to ‘brand’ names; it's safer to donate to larger, established, recognizable charities with track records.
• Link to a legitimate charity from a reputable website, such as that of “charity watchdog” Charity Navigator, which evaluates the financial health of over 5,500 of the nation’s largest charities; or the Better Business Bureau’s Wise Giving Alliance
• Do not send money to a foreign bank account overseas.
Timothy Hilbert, CPA, of the Kreischer Miller accounting firm in Horsham, Pa., advises checking out the IRS Publication 78, a list of 501c(3) organizations eligible to receive tax-deductible charitable contributions. The list is frequently updated to include new organizations and to delete/revoke organizations which are no longer considered qualified. The Pennsylvania Bureau of Charitable Organizations also lists recognized charities within the state and posts local and national charity fraud alerts.
Hilbert also cautions, that “The more pressure you get from the caller, the more likely it’s a ruse. The greater the sob story, the greater caution to use.” He offers some additional tips to help you direct your charitable gift wisely:
• Avoid requests from those claiming to be victims or family members of disaster victims.
• Avoid telemarketer solicitations unless you are sure of the caller.
• Do not give out personal information such as your credit card account, checking account, or Social Security number over the phone. While legitimate charities may also ask for an immediate credit card payment, it’s preferable to request that a solicitation be mailed to you or request an address to mail your check to.
• Telemarketing calls for donations, even if legitimate, usually involve paid solicitors. At the very least that is an inefficient way of running a charity, says Hilbert, and you are better off initiating a donation directly.
The charity watchdog organization Charity Navigator uses a charity’s website and its data from the newly expanded IRS Form 990 to rate charities by evaluating two broad areas of financial health: their organizational efficiency in terms of overhead and expenses, and their organizational capacity, the extent to which the charity is sustaining its programs and services and whether it can continue to do so. It also issues an overall rating, reflecting the charity’s performance in both areas. Among the indicators for organizational efficiency are fundraising efficiency — the amount a charity spends to raise $1. Charities are rated up to four stars in any given category, including the overall rating.
Click here for Charity Navigator’s link to three-and-four-star charities for Japan earthquake and tsunami relief.
Click here for some additional charitable giving tips from the Federal Trade Commission.
Philadelphia Corporation for Aging’s Stop Senior Scams website offers tips to recognize and avoid charity scams and other forms of financial abuse.