Avoiding Charity Fraud in 7 Steps

Donating to a charity is a great way to give back to society. But your money might not be going where you think it is going.

Charity fraud is a popular way for scam artists to prey on unsuspecting individuals looking to do some good in the world. Scammers tend to spike in number around the holidays but with our weakened economy the number of charity fraud cases has been on the increase in general. Before you decide to put your money towards a good cause make sure to equip yourself with the facts.

The Federal Trade Commission website has a list of things to ask when someone approaches you about making a charitable donation:

• It is crucial to get all the contact information for the charity. Confirm the organization's name, address, and phone number. You should also ask about the different programs it offers and if the charity can supply you with more information via flyers, pamphlets, or an E-mail.
• When you are contacted — over the phone, E-mail or in person — it is okay to ask what affiliation the individual has with the charity. Charities typically hire professional fundraisers and other people who know all the ins and outs of that particular organization. They should also be able to tell you what portion of your contributions may go toward fundraising costs.
• If you still don't feel something is right the best thing to do is to ask for the address of an informational website and call back after learning more about the cause. The FTC suggests you look into the National Association of State Charity Officials, a website that posts lists of the charities regulated by each state.

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Charity Fraud Warning Signs

• A High-Pressure Pitch — If the professional fundraiser is putting too much pressure on you, you should decline. Professional fundraisers are there to promote awareness about the charity. High-pressure pitches are signs of desperation and can be a good indicator of fraud.
• Cash-Only — We suggest avoiding charities who only take cash donations altogether. If you feel bad about turning an organization down, find your state on the National Association of State Charity Officials website and browse the available charities.
• Pushiness or Impatience — If you decide to donate and they seem eager to get your money as soon as possible, i.e. offering to send someone overnight, or asking you to wire the money, that's another bad sign. Charities are always very thankful to receive donations but are also patient.
• New Charities — In the wake of a tragedy, like a natural disaster or death, charities tend to spring up all over the place. It's not that these people necessarily want to scam you, its that they are probably not equipped to fund and run a charity. Avoid brand new charities because your money may not be used towards the cause. If the cause is one you are passionate about wait some time until the charity establishes itself.

Giving back is good but getting taken advantage of isn't. It is hard to believe that there are people out there that would commit a crime like charity fraud, but as long as you are ready and informed your money will be sure to go to a good cause.