Americans donate the most to nonprofits during the holiday season, which you may also know as the “season of giving.” Out of a total $23 billion in charitable donations made in 2016, nearly one in five came in December alone, making it the largest giving month of the year, according to Blackbaud's 2016 Charitable Giving Report.
Charity scammers want a slice of that $23 billion fruitcake and will trick you out of your donation to get it. Because scammers use many of the same mediums to reach you that charities do — calls, emails, social media, etc. — it’s sometimes difficult to tell what’s legitimate. Keep your eyes peeled for these common signs of a charity scams, so you can ensure that your giving season goes off without a hitch.
5 signs you might be donating to a charity scam
1. The asker gives little to no information about the organization. Any correspondence asking you for a donation should include the full name of the charity. If you get a call, the caller should give a name, too, according to Charity Navigator. If you get correspondence from someone who claims to be requesting donations on behalf of a charity, but can’t or won’t give you more detailed information about the charity, it may be a scam, the Federal Trade Commission (FTC) warns.
What to do:
- Do your research. Ask for more information about the organization soliciting your donation before you open wallet or purse. The FTC recommends you ask for specific information like the organization’s full name and contact information. A telltale sign of a scam is a name that’s similar to that of a reputable organization, but is misspelled or slightly off.
- Cross-reference. Charity Navigator recommends that before you give, you also ask about the charity’s mission and goals, and about what it's doing to achieve those ends. Cross-reference that information with other sources of information: the charity’s website, its IRS Form 990, audited financial statements. Either Form 990 or the company’s financial reports — sometimes, both — should be available at guidestar.org.
2. The asker cannot provide proof that your contribution will be tax-deductible. Donations made to nonprofit organizations are tax-deductible, but not all charities are nonprofits. Beware: Tax-exempt is not the same thing as tax-deductible. If the organization says it’s tax-exempt, that means it doesn’t pay taxes to the government, not that you won’t have to.
What to do:
- Check for yourself. If the asker is unsure whether your donation is tax-deductible, take a step back and do your own research. Your donation must be made to a 501(c)(3) exempt organization to be tax-deductible. If the organization says it has such status but can’t prove it, it's possible you’re dealing with a scam charity, the FTC warns. You can check the IRS online database to see if the organization is eligible to receive tax-deductible donations.
3. The asker puts a lot of pressure on you to make a donation. If the person asking you to donate is leaning on you hard, rushing the donation process or threatening you in some way — can you say, “Red flags”? That’s indeed what they are, according to the FTC. Similarly, if the asker sounds like he or she is in a rush to receive the funds — offering, for instance, to send a person to collect your donation as soon as possible or advising you to wire the cash immediately — once again, you may be looking at a charity scam.
What to do:
- Don’t donate. Don’t give a donation if you feel pressured to donate to an organization you don’t know. If you’re being asked to donate to a real charity, the person asking you to donate may apply some pressure, but it shouldn’t feel like harassment.
4. You receive a “thank you,” but don’t remember doing anything to deserve one. If you receive an email, call, text or letter thanking you for a donation you don’t remember making, you may be the target of a scam, the FTC warns. A donation you don’t remember making could be a sign of identity theft, or a scammer could be trying to persuade you to give money by convincing you you’ve already done so before.
What to do:
- Santa checks his list twice. Double-checking is good. Don’t assume you or someone you know made a donation — always check to see if a charity is legitimate before donating. The FTC recommends keeping a record of your donations so you can verify a caller’s claim that you’re a previous donor. If the charity contacting you is legitimate, check your accounts and credit report for signs of fraud or identity theft and file a complaint with the IRS.
5. The asker requests cash-only donations. There is virtually no legitimate reason you would be restricted to making a donation in cash only, the FTC says. Even if a charity is asking for donations face-to-face, you can still write a check. If an organization contacts you via phone or email but says you can only make a donation in cash, this may be another scam.
What to do:
- Write a check. According to the FTC, it's best to donate to a charity via check or credit card for security and tax purposes. Cash is difficult to trace after it’s been sent, which is why scammers will ask you to donate in cash. Whatever you do, the FTC recommends you don’t wire any money to anyone saying he or she is from a charity. If you decide to donate via check, only do so after you have researched the organization and are confident it’s the real deal.
Don’t waste your donation this giving season
Even if you don’t notice any of these red flags, it’s your responsibility as a donor to ensure that a charity is legitimate before you give. A number of resources exist to help make sure your donation is going where you intended, including the Better Business Bureau’s Wise Giving Alliance, Charity Navigator, CharityWatch, GuideStar and the National Association of State Charity Officials.
MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.