You want to do the right thing. You want to help those in need. Unfortunately, not everybody shares your altruistic point of view. There are people out there who only want to help themselves, and they're willing to do it by taking advantage of your good nature and stealing your money. Worst of all, they do it in the name of charity (see The 50 Worst Charities in America – How to Keep from Being Scammed). The scammers prey on donors and their goodwill by pretending to help an array of people in need, ranging from firefighters and police officers to cancer patients and dying children.

Sadly, there are so many sophisticated charity scams operating that it's difficult for would-be donors to tell the fake charities from the real ones. Email, snail mail, television and even face-to-face solicitations seek funding for a wide range of causes. The scammers use natural disasters, websites designed to look exactly like legitimate charities and high-pressure sales tactics, including guilt and promises of sweepstakes winnings to entice donors. To prevent being scammed, absolutely avoid charities that:

1. Won’t Take a Check 

Legitimate charities don’t insist on cash donations. Nor do they require donations to be made via wire transfer. To learn more about the money-transfer business and the wire fraud associated with it, see Will Bitcoin And Walmart Force Western Union To Change Its Business Model?

2. Can’t Be Reached by Phone   

Legitimate charities have working telephone numbers and offices with staff members who can answer your questions. You should be able to contact the office and discuss the charities' activities (see Qualified Charitable Organization), including how the money is spent and what percentage of it goes to those in need vs. what is spent on administrative expenses and executive salaries.   

3. Solicit Donations via Email   

Email is a scammer’s dream come true. With the push of a button a blast email message can reach an enormous audience. If just a small percentage of those people respond, the scammer makes money. Legitimate charities also solicit by email. So if you are charitably inclined, you don’t need an unsolicited email to help you decide where to donate. Hit the delete key for ones you don't know and respond to charities that reflect your values. 

4. Call You on the Phone     

Like email, telemarketing is a great tool for scammers. Dialing for dollars is a numbers game. Call enough numbers and somebody will send money. Unfortunately, most of that money ends up in the hands of the people making the calls instead of the charities they claim to represent. If you get a call from somebody asking for money, hang up the phone. If you can’t bring yourself to do that, at the very least ask for a call back number. Do not donate on the spot. Take some time to learn more about the charity and, if you like what you learn, call back and make your donation. 

5. Thank You For a Pledge You Don’t Remember Making  

Scammers often start with a "thank you," telling you that they appreciate your pledge and are now contacting you to connect. The letters usually read:  “Thank you for your membership” or something similar and end with a request for a donation. If you don’t remember becoming a member, don’t make the donation. 

Research First

While there is no single method for identifying scams, there are some basic steps you can take to reduce the odds of falling victim to them. Think of charitable donations as investments in causes that you believe in. Just as you would with any other investment, do the research and conduct the due diligence necessary to fully understand the investment before handing over your money. A variety of websites can assist you in your efforts, including the Better Business Bureau’s Wise Giving Alliance, GuideStar, Charity Navigator and CharityWatch.

The Bottom Line

If a charity comes to you with a high-pressure sales pitch or a slick mailing campaign, your scam radar should come to full alert. Instead of giving in to advertising pitches, you can exercise your desire to help others by acting locally. Plan out your charitable giving for the year rather than making spur-of-the-moment donations.

Seek out charities that operate where you live rather than responding to solicitations. Find an animal shelter, a soup kitchen, a church, a women’s shelter or another organization that shares your values and make your donation directly. Better still, also donate your time. You can participate directly in the charities' efforts to help others and know for sure that your donation went to work for a good cause.

 

 

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.