What is Charity Scam and How to Avoid it?

Sunday, April 17, 2022

Scams involving charity are not confined to individuals. It’s not surprising that people may donate to nefarious or suspicious organizations.

Examples include when significant companies such as Apple, Google, or Microsoft accidentally donated millions of dollars to the Black Lives Matter Foundation.

This foundation is not affiliated with the Black Lives Matter movement.

People are more vulnerable to charity fraud because many people will donate their money.

Trust in the Age of Scamming is a series that provides practical advice on how to verify the legitimacy of a fundraiser or nonprofit and how to avoid sending funds to unstressful organizations.

If you can, donate to registered non-profits. For more information, visit their website.

Watchdog websites or government websites are great ways to confirm the legitimacy of nonprofit organizations—for example, the Charity Commission in the UK or the Guidestar US charities.

Nonprofits must register with the local tax authority in most countries. Sometimes, the tax authorities will publish lists.

Many registered charities have websites that provide more information.

These are some questions that you might be able to find answers to on the website of a nonprofit to verify its legitimacy:

  • What is the organization’s mission? It should clearly identify the problems it seeks to solve. This is suspicious if the mission is vague or not clear.
  • Do they provide information about the initiatives that they support? A website should include detailed information about their causes and the projects or initiatives that they fund.
  • What do they spend their money on? Most companies will publish financial reports detailing all their spending. If financial reporting is not available, you can look at success metrics such as the number of projects completed and how many people helped. You should not approach a website that doesn’t provide quantitative information.
  • Does your donation qualify for tax deduction? Do you reside in a country where tax-deductible donations are allowed? Check with your local tax authority to confirm.

Avoid charity fraud by being extra careful when you use crowdfunding sites

There are often very worthwhile causes that seek to raise funds without the protection of a formal organization.

These causes could include natural disaster relief, community improvement projects, or family funeral expenses.

There have been some bad actors who take advantage of consumer generosity.

These are the questions to ask before you donate.

  • Do you know someone who is involved with this fundraiser? Contact them to find out more about the plans. You can also verify the authenticity of the fundraiser by looking for additional sources such as local news articles or social media pages.
  • Has the organizer clearly stated how the money will be used? Every crowdsourced fundraiser should state what the money is being used for. If a community is raising money for an unexpected loss, it should state on the fundraising page that the funds will be used to pay for funeral expenses, education, and other costs. The more details you can provide, the better.
  • Is the goal reasonable? A person who is trying to raise money for a field trip for a child’s group probably doesn’t need $100,000. For large-scale fundraising efforts for disaster relief, $500 is too small. It’s worth looking into the fundraising goal if it seems suspicious.
  • Does the money go to a formal or larger organization? If it is, you might consider donating directly to that organization.

Secure payment methods are the best way to avoid fraud in charity fundraising

Many charities and non-profits offer secure ways to donate money directly from their website.

You can use a credit card or an authorized payment system like PayPal.

These payment methods are confident because you can sue the nonprofit if they become fraudulent.

Consumers should avoid cash and upfront payment methods like wire transfers, money orders, pre-loaded cards, or electronic currency.

These methods are not standard for most nonprofits and offer little protection against fraud.

Never give your credit card information or payment information to telemarketers if they contact you to donate to an organization.

Ask for a website or any other reliable source if you are interested in the cause being raised.

This will help you avoid scams.

Avoid telemarketers who push you to donate immediately by calling.

Review your experience to validate it and share it with others

The above methods will help you confirm the organization’s legitimacy you wish to donate. Additionally, a 99consumer.com profile page can be used to verify that they are trustworthy.

Many consumers leave reviews about nonprofits.

These reviews can provide information like how they interact with donors, their transparency, and how it was to take part in activities or events hosted by the organization.

You can share your experience with a non-profit organization by leaving a review on 99consumer.com.