Be Cautious With Your Charitable Giving Part I

Charitable giving is a basic part of the American creed. It's no surprise, then, that there are 700,000+ federally recognized charities in the U.S. Sadly, this makes it easy to fall victim to fake charities.

Most of us are fairly vigilant about consumer fraud, which is why when we get an email from the Treasurer of Nigeria asking us to smuggle $47,000,000 dollars into the U.S., it's easy enough to hit the delete key. But what kind of scum would bilk you out of money by pretending to be a charity?

America the Generous

Lots of scum, actually.

It's hard to underestimate the depths to which some people will sink when they find a way to make money for nothing. One way they do this is by soliciting for non-existent charities or, more commonly, by misrepresenting how the money will be used for the real charities they're soliciting for.

I'm not talking about the poor utilization of donations that happens all the time at certain big charities; that's just bad management. I'm talking about true fraud, and it comes in two basic flavors that I like to call a) legal but immoral, and b) pure evil.

Legal but immoral

Did you know that there are professional fundraising companies out there? They contract with an organization to raise funds, and then do all the work of finding donors. As you might expect, they take a bit off the top to make a profit and pay their expenses.

Actually, it might be better to say that most take a bit off the bottom to pass on to the charity. Some take as much as 85% for themselves. Yes, Virginia, only 15 cents out of your donation dollar gets sent on. Kinda takes all the joy out of giving to a charity, doesn't it?

At the moment, this is legal. But then again, so were Ponzi schemes once upon a time.

Pure evil

In the "pure evil" category are the scams involving charities that never existed. These are the ones that actively take advantage of human compassion, often in the wake of disasters like 9/11 and the 2004 tsunamis in Asia.

Low-lives their solicitors may be, but they tend to be good actors. They combine emotional words and images with hard-sell tactics to get you to give--and if you let them, they'll drain your bank accounts, too.

What to do, what to do?

Handling false charities is the type of sticky situation that calls for more than one article, so we'll cover how to deal with solicitations from charities in Part II of this article. Till then, keep your eyes open, and be careful with your charitable giving.