How to Spot a Charity Scam From a Mile Away

By Ashley Eneriz on 8 December 2016 0 comments

When it comes to donating to charity, people have good intentions. They want to give to a worthy cause, but unfortunately, so many individuals do very little research before opening up their checkbooks.

While many charities are legitimate, there are several that should be avoided. They are the ones that rate low, with the majority of their funds being funneled into the pockets of CEOs or marketing efforts. For example, the Catholic League for Religious and Civil Rights is one charity that is low-rated by Charity Navigator, yet has one of the highest paid CEOs. (See also: Surprisingly Easy Ways You Can Support Charity)

Here's how to make sure your donation is winding up in the right hands.

Make Sure the Name Is Right

Some notable low-rated charities have made it a point to choose names similar to popular nonprofit organizations. For example, Cancer Research Institute is a highly rated charity, but Cancer Survivors' Fund and American Association for Cancer Support are both low-rated charities, according to Consumer Reports. Both of the low-rated charities have important sounding names, and it can be easy to confuse them when there are so many to keep track of.

Avoid Callers

Don't give in to pesky callers asking for donations. Often telemarketers are hired by select charities to help raise funds. However, the charity does not get all of those funds. Instead, a lot of your donation will end up going to the marketers rather than your cause. Definitely do not give any personal information, such as your credit card or Social Security number to any charity. Most importantly, if anybody pressures you to give money, then it is best to walk away.

Know Where the Money Goes

The highest rated charities are very transparent about where their money goes. You should be able to see the organization's annual expense reports or the charity's Form 990. Churches and other big religious groups are not required to file 990s, so be sure to check them out at Ministry Watch, a website that helps alert donors to fraudulent religious charities. (See also: 5 Ways Giving to Charity Is Good for You)

Don't Donate Cash or Give Through Wire Transfers

Never give any charity cash or send money through wire transfers. If the charity insists on cash or a wire transfer, it should make you suspicious of the organization. But what about religious tithing? While dropping cash in your local place of worship's donation bucket doesn't mean you are donating to a scam charity, it is still wiser to write a check or donate online. This will allow you to keep track of your charitable giving for tax purposes. If you do give cash, try your best to get a receipt.

Be on Alert

During the holidays, more for-profit charities are likely to increase their marketing. Expect more calls and emails that will appeal to your emotions. Of course you want to help wounded veterans, homeless children, and abused pets but if you have never heard of the charity, then don't rush into donating. Charity scams also are more likely to pop up after a natural disaster, such as a hurricane.

Ask a charity if they are registered, and if they claim they are, then get the registration number. Also know that most respectable charities do not ask for donations via email, unless an individual has already signed up for the mailing list.

Do Some Research

Before you donate a large sum of money to any charity, spend a few minutes researching the organization. You should be able to find the rating of charities on the Better Business Bureau, Charity Navigator, Charity Watch, BBB Wise Giving Alliance, and Consumer Reports.

It is best to decide at the beginning of the year what your annual charitable giving will be and which charities you want to donate to. This then puts you and your budget in the right place for donating money and helping those in need.

Charity scammers take advantage of people's goodwill and desire to help. However, these scammers can steal more than just your money. They can steal your identity if you give out too much information. Give to causes you care about while also protecting your bank account and personal information.

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