Signs of a charity Scam

These days, charities and fundraisers (groups that solicit funds on behalf of organizations) use the phone, face- to-face contact, email, the internet (including social networking sites), and mobile devices to solicit and obtain donations. Naturally, scammers use these same methods to take advantage of your goodwill. Regardless of how they reach you, avoid any charity or fundraiser where any of the following apply:

Refuses to provide detailed information about its identity, mission, costs, and how the donation will be used.

• Won’t provide proof that a contribution is tax deductible.
  
• Uses a name that closely resembles that of a better-known, reputable organization.
• Thanks you for a pledge you don’t remember making.Uses high-pressure tactics like trying to get you to donate immediately, without giving you time to think about it and do your research.
• Asks for donations in cash or asks you to wire money.
• Offers to send a courier or overnight delivery service to collect the donation immediately.
• Guarantees sweepstakes winnings in exchange for a contribution. By law, you never have to give a donation to be eligible to win a sweepstakes.

Report Charity Scams

If you think you’ve been the victim of a charity scam or if a fundraiser has violated Do Not Call rules, file a complaint with the Federal Trade Commission. Your complaints can help detect patterns of wrong-doing and lead to investigations and prosecutions.

When donations aren’t  deductible: While it’s very low on your consideration list after a national tragedy, not every donation to help victims is tax deductible.
 
Among the rules for charitable giving is that itemized donations only can be claimed if they’re made to organizations that receive 501(c)(3) tax-exempt status from the IRS. The Internal Revenue Code specifically disallows a tax deduction for gifts to individuals.

That means if you give to a fund created to help an individual, it might help that person and his or her family, but you get no tax benefit for your gift. It doesn’t matter how valid, trustworthy and worthwhile the effort for the needy person(s).

If you still want to give to such an assistance effort and are satisfied that a fund created for the benefit of a single person (or his or her family) is worthwhile, great.

But, just to be sure, do not give money directly to the person soliciting your financial aid. Make sure that your gift goes into a bank account established for the folks who need it.

Charity Donation Checklist

Take the following precautions to make sure your donation benefits  the  people  and  organizations you want to help.

• Ask for detailed information about the charity, including name, address, and telephone number.
  
• Get the exact name of the organization and do some research. Searching the name of the organization online—especially with the word
• “complaint(s)” or “scam”—is one way to learn about its reputation.
• Call the charity. Find out if the organization is aware of the solicitation and has authorized the use of its name. The organization’s development staff should be able to help you.
• Find out if the charity or fundraiser must be reg- istered in your state by contacting the National Association of State Charity Officials.
• Check if the charity is trustworthy by contacting the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.
• Keep a record of your donations.
• Visit the Internal Revenue Service (IRS) webpage to find out which organizations are eligible to receive tax deductible contributions.
• Know the difference between “tax exempt” and “tax deductible.” Tax exempt means the organization doesn’t have to pay taxes.
• Tax deductible means you can deduct your contribution on your federal income tax return.
• Never send cash donations. For security and tax purposes, it’s best to pay by check—made payable to the charity—or by credit card.
• Never wire money to someone claiming to be a charity. Scammers often request donations to be wired because wiring money is like sending cash: once you send it, you can’t get it back.
• Do not provide your credit or check card number, bank account number or any personal information until you’ve thoroughly researched the charity.
  
• Be wary of charities that spring up too suddenly in response to current events and natural disasters. Even if they are legitimate, they probably don’t have the infrastructure to get the donations to the affected area or people.
• If a donation request comes from a group claiming to help your local community (for example, local police or firefighters), ask the local agency if they have heard of the group and are getting financial support.
• What about texting? If you text to donate, the charge will show up on your mobile phone bill. If you’ve asked your mobile phone provider to block premium text messages—texts that cost extra— then you won’t be able to donate this way.