7 Tips to Avoid Fake Fundraising Scams After a Disaster

by Lynnette Khalfani-Cox, The Money Coach on May 22, 2013

in Scams


 Scams

Crowd-funding and online fundraising campaigns are becoming popular and convenient ways for nonprofit organizations and individuals to request and manage donations.

 

Unfortunately, fundraising scams are also on the rise, and people who donate gifts or cash may not even be donating it to the organization or person intended.

 

In the wake of several questionable fundraising efforts to allegedly assist those Cleveland kidnapping victims who were rescued after a decade of captivity, the Better Business Bureau has issued a warning about charity scams. The BBB encourages people to do their research when an organization or someone requesting a donation contacts them.

 

Whether you want to help out victims of heinous crimes, or victims of natural disasters — like the families impacted by the massive and deadly tornado in Moore, Oklahoma — here are seven tips to avoid fake fundraising scams:

 

1. Don’t make purely emotional giving decisions. As hard as it might be not to react to unfortunate events and tragic situations, it’s best to keep emotions out of the decision-making process, according to H. Art Taylor, President and CEO of the BBB Wise Giving Alliance.

 

Many tragic events can stir up emotions that make some people less cautious about donating money. But try not to be driven by pure emotion alone. Use your head too. Check with the BBB before you agree to participate in any fundraising efforts.

 

2. Do your research. Don’t be too quick to donate because you may be wasting your generous efforts on a fake organization or poorly managed fundraising event. Find trusted charities that can make the most use of your hard-earned dollars, and groups that will value your donation.

 

3. Check registration details. Currently, 40 of the 50 states in the United States require charities to register with a state government agency before they can start soliciting charitable donations.

 

Check with your state’s Office of the Attorney General to see if the organization is registered and is legitimate. If you can’t find any proof of registration, there is a good chance that the organization is running a fundraising scam.

 

4. Read disclosures carefully. If a retailer is running any type of sale or promotion stating that the proceeds of each sale are going to charity or that a percentage of sales are going to a charitable organization, make sure you have reviewed their disclosures carefully.

 

The disclosure needs to state the actual amount or proposed amount of the donation and any maximum limits for the effort. Fundraising scams typically don’t have a formal disclosure statement.

 

5. Be careful with online giving efforts. Whether it’s a Facebook friend posting links to a donation site or a website that’s soliciting donations independently, be cautious about donating money online and providing credit card information.

 

Some sites may be set up to download malware to your computer and steal your personal financial information. Always look for the “https” in the URL of a website before processing a transaction, since that will tell you that the site you’re using is secure.

 


6. Give locally and only to 501(c)(3) charities. Make the decision to work only with charities in your local community and those that are working towards raising their own funds – instead of hiring a marketing company or third parties to solicit funds on their behalf. But national charities that are well-known, such as the Red Cross, are good alternatives too, as they operate in many local communities around the country and even globally.

 

Check to see if the charity is a 501(c)(3) organization, which is a nonprofit that is exempt from federal income tax. Locally-run charities may be far less risky than unknown organizations that could be operating from anywhere in the world.


 

7. Check charity reports. The Better Business Bureau reviews charitable organizations to make sure they meet all 20 BBB Standards for Charity Accountability. You can visit www.give.org and www.bbb.org to learn more about nationally soliciting charities and organizations that meet these criteria.


Related Questions:

  • advice to avoid bogus money
  • fundraising scammer internet
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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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