The Federal Trade Commission received 1,843 complaints of charity fraud in 2007. But the number of incidents is probably far greater because most contributors don't realize they've been defrauded, says Lois Greisman, associate director of the FTC's division of marketing practices.
Donors increasingly are seeking more accountability from the charities they help, says Bob Ottenhoff, president of GuideStar, a Washington, D.C.-based clearinghouse for the USA's more than 1.7 million non-profits. Many donors continue to steer dollars to religious, educational and health care institutions, but more are donating to groups that focus on a pet cause; as a result, they're "raising their expectations of what they expect an organization to do and how they expect it to perform," he says.
Ottenhoff and other watchdogs urge people to do a little homework before making a donation to ensure that their money goes to the cause or community for which it was intended.
USA TODAY's Charisse Jones examines tips and resources to guide your giving:
Q: What's the first step in picking a charity?
A: Focus on your interests and priorities. Do you prefer an international relief organization or one that specifically serves your community? A new group that has an innovative mission or a long-standing charity that has shown it can deliver?
"So often … we give as a result of a phone call, or perhaps a piece of mail we got or even someone we met on the street," Ottenhoff says. "And that's fine to respond with your heart, but we also urge donors to give with your head."
Q:How do you pinpoint a charity?
A: Compile a list of groups that address the issues you find important. Then determine what their missions are and how successful they are.
Q: How do you get that information?
A: Ask those who contact you to send you information. The charity's website should answer questions. Look there for the group's annual report and IRS Form 990 to learn about its finances and how it spends its money.
Several organizations also provide information on charities, including Charity Navigator (charitynavigator.org), GuideStar (guidestar.org), the BBB Wise Giving Alliance (us.bbb.org/charity) and many local Better Business Bureaus.
Q:How can you track how a donation is spent, to ensure it won't simply pay an administrator's salary?
A: No government regulations dictate what percentage of contributions must go directly to a charity's cause, fundraising or overhead, Ottenhoff says. The BBB Wise Giving Alliance's guideline: Groups should spend at least 65 cents of every dollar on its programs.
Q: What if an organization doesn't reveal the breakdown on its spending?
A: "If you start asking those questions and they won't answer, that's a sign that there's something wrong; a legitimate charity will answer the questions," says Stacy Palmer, editor of TheChronicle of Philanthropy, an independent newspaper that covers charities.
Q: What about phone and e-mail solicitations?
A: Though the charity may be legitimate, do your research before you commit. "What I often say is, 'Send me something in the mail' if I'm interested, but I don't give directly over the telephone itself," says Palmer, who responds similarly to e-mail solicitations.
If the caller is a fundraiser, ask for whom they are collecting money. Then call that organization to make sure it has approved the donation request.
Be wary of unsolicited e-mails, says Art Taylor, president of the BBB Wise Giving Alliance. Charities usually don't contact potential contributors via e-mail unless they've received donations from them in the past.
Q: If an organization sounds familiar or mentions that it is working with the police department or some other local agency, can it automatically be trusted?
A: Some illegitimate organizations use names that sound like well-known charities. Ask the solicitor for a website or other way to get information about the charity. Also, just because a fundraiser refers to an agency serving your community doesn't mean the group will ever see those donations. Call the agency to confirm that it is indeed the beneficiary.
Q: What about high-pressure solicitations?
A: Resist on-the-spot appeals, such as a warning from a solicitor at work that your boss will be disappointed if you don't give, or a fundraiser who says your contribution is desperately needed.
Ask the organization or fundraiser to mail you some information.
Curbside efforts like the firefighters' "Fill the Boot" campaigns at traffic intersections and the Salvation Army's holiday bell ringers rely on spare change — and trust.
Q: Any risk bucket drives might be fake?
A: There are certainly precautions you can take. Bell ringers should be wearing aprons or a uniform showing they are official, Salvation Army national spokeswoman Melissa Temme says. Keep on walking if the coin kettle is not attached to a tripod, as it's likely been stolen.
If you want a tax break for your contribution, stick a check into the slot instead of loose change; the Salvation Army will send a thank-you card to the address on the check, which serves as a receipt.
Q: What legal recourse is there if you believe you've been duped by an illegitimate charity?
A: Consult the agency that regulates charities in your state, usually housed in the state attorney general's office. You also can contact the FTC.
Q: Sometimes a gift is given in exchange for a donation. Should that be a concern?
A: Not necessarily, but part of your donation is likely paying for those goods or entertainment.
If you're ever told that a contribution will enter you in a sweepstakes, remember that under federal law you aren't required to donate to be eligible.
Q: Are online contributions OK?
A: Yes. It can be efficient for both you and the charity. But only do so after you have thoroughly researched the organization.
Websites such as Network for Good (networkforgood.org/npo) enable you to make online contributions to several charities. You also can even give anonymously if you prefer.
Q: If a charity has a broad mandate or service area, can you specifically target a gift?
A: Ask if you can earmark your donation for a particular community or issue. Most charities will allow it.
Q: What if you feel cash-strapped yourself?
A: Consider giving your time or skills — or even a piece of property. "There's a variety of different ways for you to get involved," Ottenhoff says. "And that might be, in some ways, the best gift this charity could receive."
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