Americans are incredibly generous. We are expected to donate about $300 billion to charity this year, half of which will be contributed between Thanksgiving and the end of the year.
Right now, more than a million charitable organizations are trying to get a share of this money. That explains all the calls, letters, and e-mail solicitations you have no doubt been getting the past few weeks.
The vast majority of charitable organizations are honest and will put your money to good use – most, but not all. And even the legitimate ones sometimes use questionable solicitation tactics to get contributions.
“People need to be careful of fraudulent charitable solicitations any time of year, but especially around the holidays when both legitimate and fraudulent charities will try to tug at your heartstrings,” says Susan Grant, director of the National Consumers League’s Fraud Information Center.
Have you ever gotten a phone call like this?
Hi, my name is Bob and I’m being paid to convince you to donate to an organization I don’t know much about. But the script they gave me says they’re a wonderful group and they really need your help. If you donate right now, without taking the time to check them out, I’ll get a really nice commission.
You probably have. It just sounded different. Telemarketers making these calls don’t say they’re getting paid to snag donations. And they’re not about to tell you most of your money is going to them, not the charity.
Let the donor beware!
Don’t assume the majority of the money you donate will go to the group’s programs and services. There is no limit to how much a charity can spend on fundraising. Years ago, the Supreme Court ruled government agencies do not have the right to regulate this.
“You can spend 95 cents of every dollar collected on fundraising and it’s legal, as long as you’re not misrepresenting how you are spending the money," says Bennett Weiner, CEO of the Better Business Bureau’s Wise Giving Alliance.
Police, firefighter solicitations
In my experience, police and firefighter organizations use some of the most aggressive and deceptive fundraisers. Some of these groups are legitimate and do good work, but most have absolutely no connection to your local police or fire department. Cleverly worded phone calls and mailings can trick you into making that assumption.
“Some are not even charities,” cautions Weiner.
They are unions or fraternal organizations. If you give to them, your contribution may not be tax deductible.
In September, the Federal Trade Commission charged a major nationwide telephone fundraiser with misleading people about where their money went. Civic Development Group, a New Jersey-based telemarketer, raises tens of millions of dollars each year, mainly for police and firefighter groups.
The FTC alleges phone solicitors tell consumers the charity receives 100 percent of their donation and that no professional fund-raising company is involved in the campaign. According to the government’s complaint, on average no more than 15 percent of the consumer’s donation goes to the charity. The rest goes to the professional fundraiser.
“We cannot require anybody to make a disclosure regarding the amount of the donation going to charitable purposes,” says FTC lawyer Joel Brenner. “But if they are making misrepresentations, we can stop that.”
I contacted Civic Development Group, but have not been able to get a response.
Don’t believe what you hear or read in a charity solicitation. Before you give, check them out yourself. Verify the claims.
“Take your time and be careful,” cautions the BBB’s Weiner. “There are lots of really good charities that need your help and with just a little bit of work, you can find them and give with confidence, knowing that your contribution is going to be used wisely.”
The Internet makes it easy to check out a charity:
- Charity Navigator rates the financial health of more than 5,000 of America's best-known charities.
- Guidestar lists 1.7 million non-profits that are eligible to accept tax-deductible contributions.
- Most states require charities to be registered or licensed. You can find a list of state charity regulators on The National Association of State Charity Officials Web site.
The Better Business Bureau rates charities on 20 standards covering finances, governance, oversight, effectiveness and fundraising. The BBB standards require at least 65 percent of the charity’s total expenses be spent on program services.
It’s interesting to note that 30 percent of the national charities contacted by the Wise Giving Alliance would not disclose some of the requested information. Groups on the BBB’s list of "declined to be evaluated or did not respond” include: American Association of Police Officers, Multiple Sclerosis Foundation, Betty Ford Center, International Children’s Fund and National Breast Cancer Foundation.
While this does not mean those organizations are unethical or hiding something, in my book it raises a red flag any time a charity withholds information.
My two cents
I believe it’s important to give to charity. I also want to make sure my money goes to the cause and not to some fundraiser or con artist. So I have a few simple rules.
- I will not make an instant donation based on a phone solicitation. I tell the caller they can send me literature to look at. I rarely get anything; they usually hang up.
- I do not give money to someone who knocks on my door, except the neighborhood kids collecting money for their school. With anyone else, I can’t tell if it’s legit or a scam.
- I do not respond to any e-mail solicitation that includes a “donate now” link. There’s no way I can tell if this is from the real charity or a clever phishing scam. If I give online, I go to the charity’s Web site myself by typing in the URL.
At the beginning of each year, my wife and I make a list of the charities we want to help and how much we want to give. That makes it easier to say no to any solicitation that does not fit into our plan.
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