The aftermath of Hurricane Katrina, which gutted much of New Orleans and the Gulf Coast in 2005, included thousands of websites making bogus appeals for disaster contributions. The problem was so big that federal authorities formed a Hurricane Katrina Fraud Task Force to investigate and try to stop the fraudulent pitches. (To financially prepare youreslf for natural disasters, see Preparing For Nature's Worst.)
This is useful background for anguished but wary donors who want to help in the wake of the huge earthquake that hit Haiti. Especially in the era of the internet, many other major
disasters, including Sept. 11, the 2004 Thailand tsunami and several major California wildfires, have spawned reports of fraudulent fundraising.
After Hurricane Katrina, the Federal Bureau of Investigation said it counted more than 4,000 websites promoting relief services, with "many" of them fake. Some 60% appeared to be based overseas, "a reason to be cautious," an FBI official said.
Fortunately, there are some simple steps that would-be disaster relief donors can take to minimize the chance of becoming yet another victim.
1. Avoid charities you've never heard of. With plenty of reputable, well-established nonprofits around, there's rarely a need to donate to something with a name like "Citizens Committee for the Reconstruction of Haiti" or "Project to Rebuild from Haiti Earthquake."
3. Go to the charity, not the other way around. After Katrina, a big problem was e-mail with a link that took the recipient to what looked like the normal site of a known charity but was really a scam operation waiting to get your credit card number. Get the Web address on your own. Trustworthy sources include the Forbes list of America's 200 Largest Charities or charity watchdogs like the BBB Wise Giving Alliance or Charity Navigator. Type in the URL yourself or link from our list.
4. Ignore telemarketers. Even assuming the person on the phone is soliciting for a legit charity, fundraising costs from this method are likely to consume nearly all of your contribution. In any event, ask the caller to put his pitch in writing and mail it to you. The person on the phone says he's a victim? Very unlikely.
5. Don't send money overseas. Even though Haiti is a foreign disaster, don't send a donation to a foreign bank account. Experts say this is never legit.
6. Stick to established brand names. To avoid fraud, it's probably better to look to established, recognizable large charities with track records. The Forbes roster of America's 200 Largest Charities contains more than a score engaged in international aid operations; a list of those that have already announced plans for Haiti can be found here. There's a non-fraud reason, too. For people in Haiti, time is of the essence. Even a legitimate newbie charity would need time to get up to speed.
7. Restrict your donation to the cause. After 9/11, some major charities received criticism for trying to apply donations to different causes. You can require that your donation go to a specific relief effort either in a space provided for that purpose on a charity's website or by sending a check with the restriction written on the face.
8. Do your own due diligence. Using Google and simply typing in the name of a charity that interests you often can produce useful information. Guidestar can provide you with the latest available IRS tax return of most nonprofits. Every state has a charitable regulator that can be contacted; here's a list of contacts.