Fraud Alert: Charity Scams
Making the world a better place often starts by opening your wallet and giving generously to causes you care about. No matter how much you plan to donate, you want to make sure every dollar goes where you intend it. Scammers may see an opportunity to take advantage of your generosity, so it's important to do your homework before making a contribution.
Here's how to check that your hard-earned money will go toward supporting a legitimate cause.
1. Make sure it's legit
Before donating to any charity (especially one that you're not already familiar with), it's a good idea to make sure it's a legitimate organization with nonprofit status. Search for the organization's name on a charity watchdog site, like GuideStar1 and Charity Navigator.2 Through these sites, you can review an organization's credentials and confirm that it is legitimate.
Take some time to also use a search engine to dig up more information about the charity's name. Adding words like complaint," scam," or review" to your search term can help you figure out if charity is one that should be avoided,3 according to the Federal Trade Commission.
2. Evaluate social media fundraisers for organizations
Social media is becoming an increasingly common way for nonprofits to raise money. In fact, 18% of donors around the world4 have donated through Facebook's fundraising tools, according to the 2018 Global Trends in Giving Report.
Fortunately for donors, Facebook has done the hard work of verifying the legitimacy of nonprofits by verifying each organization's5 501(c)(3) status, tax ID number, registered bank accounts, and other details before allowing them to use Facebook's fundraising tools. Organizations raising money on Instagram6 must go through this same process.
3. Scrutinize personal fundraisers online
Individuals who aren't affiliated with a nonprofit can use social media and crowdfunding platforms (like GoFundMe) to raise money for just about anything, from a costly medical bill to a teacher's classroom supplies. But sometimes fraudsters try to cash in on personal hardships and set up copycat fundraisers, so how do you make sure you're donating to the right one?
Giving to people you know personally is the safest way to contribute to a crowdfunding campaign,7 according to the Federal Trade Commission. If you don't know the person, but you still want to help, see if you have any mutual friends on social media who could attest to their reputation. You could also research them online.
If a major mainstream news organization has written an article about a personal fundraiser, you can feel more confident in making a donation. Big newspapers, magazines, TV stations, and other major media outlets have fact-checking teams that work to ensure their stories are accurate and trustworthy.
Social media can give you additional clues about the authenticity of a personal fundraiser. Look to see if the fundraising campaign is being promoted through social media posts by a person who's directly affiliated with that particular cause.
Be wary of individuals who seem to have created their social media profiles around the same date as their campaign, which could be a red flag. Consider doing a reverse image search with photos from the GoFundMe page or social media fundraising page using TinEye.8 If the same photos the fundraiser is using to promote their campaign are all over the internet, it might be a sign that something's off.
4. Check trusted media outlets
Looking for reliable alternatives to big-name charities? Check major media outlets. They often publish lists of reputable organizations to support during a time of need. Since the journalists and fact-checking teams at those news organizations are expected to exercise due diligence in researching and vetting organizations featured in their stories, you can put a higher degree of trust in the featured charities.
For crises that may be too small or too local to get covered by national or international news, check media that's specific to the location to seek out organizations worth supporting. For example, if a town is struggling from a flood, look in local or regional newspapers for reputable local organizations to donate to.
5. Ask for recommendations for charities outside your area
Tapping your social network can be a smart way to find charities in a location you don't know well. If you want to donate money to an area in another country that has experienced a natural disaster, you could ask your friends and family for suggestions of trustworthy organizations. An old college friend may have personal experience volunteering with a specific charity that works in the area you want to help and can tell you about its good work. Consider their recommendations as a jumping off point for your own research.
6. Protect your payments
Finally, when making a donation, you should take steps to ensure a secure transaction. If you're donating online, double check that the website is secure: you should see HTTPS (the "s" means secure) instead of just HTTP in your URL bar. Do not donate over the phone; it could be a vishing scam. And the Federal Trade Commission9 recommends avoiding cash, gift cards, and money wires as payments, suggesting you stick to credit cards or checks instead.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- Guidestar.org, accessed June 22, 2020. Back
- Charitynavigator.org, accessed June 22, 2020 Back
- Federal Trade Commission, Before Giving to a Charity," published March 2019. Accessed June 22, 2020. Back
- 2018 Global Trends in Giving Report, Infographics," accessed June 22, 2020. Back
- Facebook, For Nonprofits," accessed June 22, 2020 Back
- Instagram, How can my nonprofit raise money on Instagram?," accessed June 22, 2020. Back
- Federal Trade Commission, Understanding Crowdfunding," published March 2020. Accessed June 22, 2020. Back
- Tineye.com, accessed June 22, 2020. Back
- Federal Trade Commission, "How to donate wisely and avoid charity scams," accessed October 29, 2020. Back
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