Beware of Fraudulent Charitable Solicitations

December 2007

As the holiday giving season gets under way, many consumers will make charitable donations to aid the needy and less fortunate. According to Charity Navigator, the nation's largest and most used evaluator of charities, 50 percent of all charitable giving is done between Thanksgiving and New Year's Eve. The National Association of Attorneys General (NAAG) and the National Association of State Charity Officials (NASCO) urge you to pay close attention to fraudulent fundraising and ensure that websites and charities are legitimate before spending and sending money.

If you are tricked into providing personal financial information, scam artists can quickly destroy a lifetime of good credit and your good name. You can save yourself months of frustration by taking a few extra minutes to research charities and websites.

Many Attorneys General provide resources on their websites to help you research a charity. These include guides for charitable giving and searchable databases to learn about specific charities and commercial fundraisers in the state. Attorneys General also offer Consumer Alerts that provide consumers with information about possible charity scams in their area.

NAAG, NASCO and the Federal Trade Commission offer the following tips to avoid becoming a victim of scams during the holiday season:

  • Be an informed giver. Ask questions before you give. Give only when you feel comfortable that your donation will support an organization and activities in which you believe.
  • Do not donate to telephone solicitors. Instead, choose a charity you support and donate directly to the charity. Many “charity” telephone solicitors keep as much as 85% of your donation as their fundraising fee. Some are simply fraudulent and not connected with a charity at all. They keep all of the money you give.
  • Refuse high-pressure appeals. Legitimate charities won't rush you to donate.
  • Ask for written information. A legitimate charity will be willing to send you information before you donate. Ask for information on the organization's mission, how your donation will be used and proof that your contribution is tax deductible.
  • Call the charity. To avoid falling victim to fraudulent solicitors, contact the charity directly before giving a donation by mail or to the person knocking at your front door. This will allow you to make sure the solicitation you received is authorized and legitimate.
  • Watch out for similar sounding names. Scam artists often try to take advantage of names that sound or look like those of respected, legitimate charities.
  • Don't send cash. For your security and tax records, make your donation by check. Write the official name of the charity on your check for record keeping purposes.
  • Be wary of a group that offers to pick up your monetary donation. A legitimate charity will have an official address where you can mail your donation. Be suspicious if an organization thanks you for a pledge you don't remember making and offers to send someone to pick up your donation. If ever in doubt, check your records for any pledge or donation.
  • Keep the right records. Make sure your donation is tax deductible from federal and state income taxes. Donating to some tax-exempt organizations may not result in a tax-deductible donation. Some organizations may try to use terms like "tax I.D. number" or "keep this receipt for your records" to suggest they are tax-exempt charities when they aren't. For record keeping, a canceled check or credit card statement generally is sufficient for IRS purposes when you donate less than $250. For larger donations, you will need a properly worded receipt from the charity confirming your donation. Remember, your tax deduction is reduced by the fair market value of any gift, meal or other incentive you receive from the charity.
  • Consider alternative forms of giving. Consult with your tax advisor about the many ways to support a charity. These alternative forms of giving include charitable gift annuities, gifts in-kind and endowments.
  • Volunteer. Your time and personal skills can be as valuable as your money to nonprofit organizations. You can also benefit by meeting people who have shared interests.

If you suspect a charity may be illegitimate, contact your state Attorney General, the Better Business Bureau or the Federal Trade Commission at ftc.gov.

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