The recent powerful earthquakes and deadly tsunamis in South Asia has killed over 70,000 people. I’m sure this devastating event tugs at your heart strings and results in many folks sending donations to their favorite charity. Unfortunately, Spammers are already planning to exploit this event and worst of all, phony charities will proliferate.
Perform your due diligence before you contribute to a charity
Don’t read the Spam. Determining which charity is legitimate is a little harder. Your goal is to find a reputable charity which donates nearly all the money collected to your given cause. A round number is about 92 cents out of every dollar collected should actually go to the cause. We have some tips to help you:
1. Don’t talk to any charity which calls you on the phone. These boiler plate operations are a huge red flag. Just hang up.
2. Check the name of the charity very carefully. The fraudsters will often use similar names. For example, Kids Wish USA was a scam. “Michael Manzer, was sent to prison for mail fraud and money laundering. This charity promised to grant the wishes of terminally ill children yet it did not grant even one wish, according to federal prosecutor Mike Snipes.” Source: Charity Watch Notice the similarity to the legitimate charity named “Make a Wish Foundation”.
3. Check the record of the charity with their local Better Business Bureau
4. Ask the charity to send you printed material via US mail. If the material does not contain details on exactly how the money is used and the percent of donations which actually reach the given cause, do not contribute.
5. Ask the charity for annual financial statements and proof of their IRS 501c non profit status. This is generally granted via an “award letter” from the IRS.
6. Avoid all charities that use a “pitch” filled with a significant amount of emotional words and or images.
7. Setting up a phony charity is pretty easy. Check the rating of the charity with Charity Watch before you contribute.