12.14.17

“Charity Fraud Targeting the Conscience of Donors” by Brittany Zeman, Intern – Tax

There is nothing more noble than thinking of others who are less fortunate when you find yourself in a position that allows you to give.

Sadly, there are people and organizations that try to take advantage of these generous attitudes at this time of year.  It is imperative that you perform your due diligence to protect yourself prior to donating to any charity.

A Business Guide to Fraud PDF

What is at Risk?

Aside from your donations not being received by the intended worthy participant, you may be at risk of the compromise of your personal information and broader identity theft.

The most vulnerable time for these charity scams is usually during the holidays as well as in wake of publicized natural disasters or tragedies. It is important to remain extra cautious during these times.

Charity Fraud Red Flags

Fraudulent charities seek to gain your trust.  It is common for these organizations to have a name or logo similar to those of national, well known charities. Make sure that you read websites, brochures, and other sources carefully and only donate securely through the known charity’s website.

Be cautious of charities that refuse to provide full disclosure of information including identity, costs, mission, and utilization of donations. Pay close attention to what is and what is not eligible for tax deductions.

The fraudulent organizations may also apply pressure on you to act quickly or else lose some type of benefit. For example, pitches to win prizes or sweepstakes. This pressure should be a warning sign that the organization may have undesirable intentions.

Be suspect if the organization only wants cash or wire transfers. The organization may not want its illegal activity to be affiliated with the banking system.

Lastly, if the charity has little to no history, be wary and do your homework thoroughly before you donate.

Donating to charity is great, but charity fraud is on the rise. Here are tips to protect yourself.

Safe Checks and Best Donating Practices

There are several steps to take to safeguard your donations go to legitimate charities. Make sure that you get detailed information about the charity including their address, website, contact information, and understand what percentage of donations are allocated to certain causes. Make sure that you avoid cash donations and use a check or credit card for security as well as tax record purposes. It is important to keep detailed records of all donations.

Charities claiming to support local firemen and police officers are often a potential fraud risk, so before donating contact the local departments and confirm that they are in fact receiving help from said charities.

Look to see if the charity provides EIN numbers (employer ID or federal tax ID) as this is a good validity check. Do not give out your social security number or passwords for any reason. It is good practice to check with the state, as many charities are required to register through the state to operate. If you do suspect that you have fallen victim to a fraudulent charity, file a complaint through the IRS’s website or file form 13909 the Tax-Exempt Organization Complaint (Referral).

Charity Validation Resources

Here is a list of reputable resources that will guide you in your charity homework process: